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Avis Budget Group Inc. has entered into an agreement with SRS Investment Management, one of its stockholders, under which Brian Choi, a designee of SRS, will be appointed to the Avis Budget Group Board of Directors.
Avis Budget Group also announced today that the Board has increased the company's share repurchase authorization by $300 million.
Under the terms of the agreement, SRS will also be entitled to recommend an independent director —not affiliated with SRS — to be added to the Avis Budget Group Board, subject to the Board's reasonable approval. SRS has agreed to vote all of its shares in favor of the company's nominees at the 2016 annual meeting as well as other customary voting commitments, according to Avis Budget.
With the addition of Choi, the Avis Budget Group Board will increase in size to 12 directors. The complete agreement between SRS and Avis Budget Group will be included in a Form 8-K to be filed with the Securities and Exchange Commission, according to Avis Budget.
"We are pleased to welcome Brian to the Board and are confident that the skills and expertise that he and the other new independent director will bring to the Board will add valuable insight as we continue to execute on our strategy," said Ronald L. Nelson, Avis Budget Group’s executive chairman. "SRS has maintained a constructive relationship with us for several years, sharing a consistent view of where our industry is headed and a focus on our company's long-term growth opportunities."
The increase in Avis Budget’s share repurchase authorization is the fourth since the company launched its buyback program in August 2013. Through Sep. 30, 2015, Avis Budget bought back more than $625 million of stock under the program, including $277 million of stock repurchased in the first nine months of 2015. As a result, in just over two years, Avis Budget reduced its outstanding shares by more than 13 million shares or 12%, says the company.
The remaining buyback authorization at Sept. 30, 2015 was $258 million, and Avis Budget continued to repurchase shares in the fourth quarter of 2015 and the first quarter of 2016, according to the company.
"In light of our strong third quarter 2015 performance and expectation that our Adjusted EBITDA will be at record levels in 2015, we are pleased to increase our share repurchase authorization," said Larry D. De Shon, CEO of Avis Budget Group. "We remain focused on allocating capital to the most attractive opportunities, and this expansion of our share repurchase authorization underscores the continued confidence we have in the long-term prospects of our business as well as our commitment to returning capital to stockholders."