PRELIMINARY PROXY STATEMENT - SUBJECT TO COMPLETION

[●], 2018

Dear Fellow Shareholder:

You are cordially invited to attend the Annual Meeting of Shareholders of Avis Budget Group, Inc., which will be held at [●] on [●], 2018, at [●], Eastern Time. We look forward to greeting as many of our shareholders as possible.

This booklet includes the Notice of Annual Meeting and the Proxy Statement. The Proxy Statement describes the business to be conducted at the Annual Meeting and provides other information concerning our company of which you should be aware when you vote your shares.

Enclosed with this booklet, you should have also received a WHITE proxy card and postage-paid return envelope. WHITE proxy cards are being solicited on behalf of our Board of Directors.

Your vote will be especially important this year. As you may be aware, SRS Investment Management, LLC and certain of its affiliates (collectively, “SRS”) have notified the Company that SRS intends to nominate a slate of five nominees for election as directors at the Annual Meeting in opposition to director nominees recommended by our Board of Directors. Our Board does NOT endorse SRS’s nominees other than Jagdeep Pahwa, Carl Sparks and Sanoke Viswanathan, and recommends that you vote FOR ALL of the nominees proposed by the Board of Directors, including Jagdeep Pahwa, Carl Sparks and Sanoke Viswanathan.

We strongly urge you to read the accompanying Proxy Statement carefully and vote FOR ALL of the nominees recommended by our Board of Directors, and in accordance with the Board’s recommendations on the other proposals, by using the enclosed WHITE proxy card. If you have voted using the proxy card sent to you by SRS, you can subsequently revoke it by using the WHITE proxy card to vote. Only your latest-dated vote will count—any prior proxy card may be revoked at any time prior to the Annual Meeting as described in the accompanying Proxy Statement.

We look forward to greeting personally those shareholders who are able to be present at the Annual Meeting. However, regardless of whether you plan to be with us at the Annual Meeting, it is important that your voice be heard. Accordingly, we request that you vote on the WHITE proxy card by telephone, by Internet or by signing, dating and returning the WHITE proxy card in the postage-paid envelope provided.

If you have any questions or require assistance with voting your WHITE proxy card, please contact our proxy solicitation firm, Innisfree M&A Incorporated:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

Shareholders may call toll-free at (877) 687-1866

Banks and brokers may call collect at (212) 750-5833

On behalf of the Board of Directors and the employees of Avis Budget Group, Inc., we would like to thank you for being a shareholder and express our appreciation for your ongoing support of our Company.

Sincerely,

Larry D. De Shon

Chief Executive Officer, President and

Chief Operating Officer

Ronald L. Nelson

Executive Chairman of the Board

PRELIMINARY PROXY STATEMENT - SUBJECT TO COMPLETION

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Avis Budget Group, Inc. (the “Company”) will be held on [●], 2018, at [●] Eastern Time, at the [●] (the “Meeting”), to consider and vote upon the following matters:

The Board of Directors has fixed the close of business on [●], 2018 as the record date for the Meeting. Only shareholders of record at that time are entitled to notice of, and to vote at, the Meeting and any adjournment or postponement thereof. A list of shareholders entitled to vote at the Meeting will be available for examination by any shareholder, for any purpose germane to the Meeting, at the Meeting and for ten days prior to the Meeting during ordinary business hours at 6 Sylvan Way, Parsippany, New Jersey 07054, the Company’s principal place of business.

The accompanying Proxy Statement provides detailed information about the matters to be considered at the Meeting. It is important that your voice be heard and your shares be represented at the Meeting whether or not you are personally able to attend. Even if you plan to attend the Meeting, we hope that you will read the Proxy Statement and the voting instructions on the enclosed WHITE proxy card. We urge you to vote TODAY by completing, signing and dating the WHITE proxy card and mailing it in the enclosed, postage pre-paid envelope, or vote by telephone or the Internet by following the instructions on the WHITE proxy card. If your shares are not registered in your own name and you would like to attend the Meeting, please ask the broker, bank or other nominee that holds the shares to provide you with evidence of your record date share ownership. If you intend to vote in person at the Meeting, you must provide a legal proxy from your broker, bank or other nominee.

Please note that SRS Investment Management, LLC and certain of its affiliates (collectively, “SRS”) have stated their intention to propose five director nominees for election at the Meeting. You may receive solicitation materials from SRS. The Company is not responsible for the accuracy of any information provided by SRS or its nominees contained in solicitation materials filed or disseminated by or on behalf of SRS or any other statements that SRS may make.

The Board does NOT endorse SRS’s nominees other than Jagdeep Pahwa, Carl Sparks and Sanoke Viswanathan and strongly recommends that you NOT sign or return any [color] proxy card sent to you by SRS. If you have previously voted using a [color] proxy card sent to you by SRS, you can subsequently revoke that proxy by following the instructions on the enclosed WHITE proxy card to vote over the Internet or by telephone or by completing, signing and dating the proxy card and mailing it in the postage pre-paid envelope provided. Only your latest dated proxy will count. Any proxy may be revoked at any time prior to its exercise at the Meeting as described in the accompanying Proxy Statement.

THE BOARD RECOMMENDS VOTING

FOR ALL OF THE BOARD’S NOMINEES ON PROPOSAL 1 AND

FOR PROPOSALS 2 AND 3 USING THE ENCLOSED WHITE PROXY CARD.

THE BOARD URGES YOU NOT TO SIGN, RETURN OR VOTE ANY

[COLOR] PROXY CARD SENT TO YOU BY SRS.

Please note that, even if you plan to attend the Meeting, we recommend that you vote using the enclosed WHITE proxy card prior to the Meeting to ensure that your shares will be represented.

Regardless of the number of shares of Common Stock of the Company that you own, your vote is important. Thank you for your continued support, interest and investment in Avis Budget Group.

By Order of the Board of Directors

Jean M. Sera

Senior Vice President & Corporate Secretary

Dated: [●], 2018

IMPORTANT

TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE MEETING, WE URGE YOU TO COMPLETE, DATE AND SIGN THE ENCLOSED WHITE PROXY CARD AND MAIL IT PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED, OR VOTE BY TELEPHONE OR THE INTERNET AS INSTRUCTED ON THE WHITE PROXY CARD, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. YOU CAN REVOKE YOUR PROXY AT ANY TIME BEFORE THE PROXIES YOU APPOINTED CAST YOUR VOTES.

If you need assistance, please call Innisfree M&A Incorporated, the firm assisting us in the solicitation of proxies in connection with the Meeting. Shareholders may call toll free at (877) 687-1866. Banks and brokers may call collect at (212) 750-5833.

The Notice of 2018 Annual Meeting of Shareholders and the attached Proxy Statement are first being made available to shareholders of record as of [●], 2018 on or about [●], 2018.

PRELIMINARY PROXY STATEMENT - SUBJECT TO COMPLETION

Proxy Statement

    Table of Contents

PRELIMINARY PROXY STATEMENT - SUBJECT TO COMPLETION

2018 Proxy Statement Summary

This summary highlights information contained elsewhere in this Proxy Statement, including under “Executive Compensation,” which includes a definition and reconciliation of Adjusted EBITDA. This summary does not contain all of the information that you should consider and you should read the entire Proxy Statement carefully before voting.

Annual Meeting of Shareholders

Voting Matters and Voting Recommendations

Your vote is extremely important this year. You may receive solicitation materials from SRS Investment Management, LLC and certain of its affiliates (collectively, “SRS”) seeking your proxy to vote for Brian Choi, Matthew Espe, Jagdeep Pahwa, Carl Sparks and Sanoke Viswanathan to become members of the Board of Directors. The Company is not responsible for the accuracy of any information provided by SRS or its nominees contained in solicitation materials filed or disseminated by or on behalf of SRS or any other statements that SRS may make.

THE BOARD OF DIRECTORS DOES NOT ENDORSE ANY OF THE SRS NOMINEES OTHER THAN JAGDEEP PAHWA, CARL SPARKS AND SANOKE VISWANATHAN, AND URGES YOU NOT TO SIGN OR RETURN ANY [COLOR] PROXY CARD SENT TO YOU BY SRS. IF YOU HAVE PREVIOUSLY SIGNED A [COLOR] PROXY CARD SENT TO YOU BY SRS, YOU CAN REVOKE IT BY SIGNING, DATING AND MAILING THE ENCLOSED WHITE PROXY CARD IN THE ENVELOPE PROVIDED. ONLY YOUR LATEST DATED PROXY WILL BE COUNTED.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR ALL” OF OUR BOARD’S NOMINEES LISTED ON THE ENCLOSED WHITE PROXY CARD.

For more information and up-to-date postings, please go to our special website, [●], or www.avisbudgetgroup.com. Information on either of our websites is not, and will not be deemed to be, a part of this Proxy Statement or incorporated into any of our other filings with the SEC. If you have any questions, please contact Innisfree M&A Incorporated, our proxy solicitor assisting us in connection with the Annual Meeting. Shareholders may call toll-free at (877) 687-1866. Banks and brokers may call collect at (212) 750-5833.

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Corporate Governance Highlights

2017 Company Performance

For 2017, our revenue increased by 2% compared to 2016 revenue, growing to $8.8 billion, our net income was $361 million, and our Adjusted EBITDA was $735 million. Our Adjusted EBITDA was below the 2017 business plan goal that we had set and was 12% lower than 2016 Adjusted EBITDA. This was primarily due to higher per-unit fleet costs and lower pricing, particularly in the first half of the year. Management partially offset these challenging industry headwinds through cost-reduction actions and strategic initiatives in the areas of profitable revenue growth, fleet optimization and operational efficiencies.

In 2017, we made investments in our business designed to lower our cost structure, modernize our core infrastructure and further our position in the evolving mobility landscape. We also returned capital to our shareholders through the repurchase of $200 million of our Common Stock, resulting in the repurchase of 6.1 million shares. Our stock price increased by 19.6% from December 31, 2016 to December 31, 2017.

In 2018, consistent with our strategy, we intend to continue to apply our brands, technology and people to drive profitable growth, while further building our position in the wide mobility services industry by continuing to: invest in connected car technology; roll-out our Demand-Fleet-Pricing system; enhance our mobile app, including targeting ease of use and speed; execute on our fleet optimization, workforce planning and shuttling initiatives; and explore new mobility partnerships and products.

2017 Compensation for our Named Executive Officers

Alignment of 2017 Compensation with Performance

Our history of pay for performance alignment was evident in the compensation paid to our named executive officers for 2017. While management’s leadership and actions partially offset industry headwinds, as described above, based on actual 2017 financial performance, performance-based long-term incentives, which were granted in 2015 and based primarily on three-year cumulative Adjusted EBITDA goals, did not vest in 2018 and were forfeited without any payout. Our named executive officers also received no payouts under the 2017 annual incentive program (based on Adjusted EBITDA goal attainment for both Global and the Americas region), and performance-based long-term incentive awards granted in 2016 and 2017 and scheduled to vest in 2019 and 2020, respectively, are currently not expected to vest.

Setting 2017 Pay Levels

In connection with the one-year anniversary of our CEO’s tenure, the Committee, with input from its compensation consultant, conducted a full review of our CEO’s compensation opportunity to determine

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the appropriate 2017 pay package. Based on the results of that review, and the Compensation Committee’s ongoing evaluation of appropriate compensation-setting practices, the Committee determined increases were appropriate. Driven in part by a full market review of pay opportunity, our Chief Executive Officer’s base salary was increased by 10% and his target long-term incentive opportunity, which is 60% performance-based, was increased by $2.5 million. As part of the regular annual review, in which both market and other factors are considered, the salaries of our President, Americas and President, International increased by approximately 4%, and the long-term incentive opportunities for these executive officers, which are 50% performance-based, increased by $200,000.

Setting 2017 Performance Metrics

The Committee conducted an in-depth review of the Company’s annual and long-term incentive programs to evaluate the efficacy of the existing performance metrics. Driven in large part by the Company’s recently updated strategic goals, which include a significant focus on margin improvement, the Committee determined to change the performance metric for the 2017 long term incentive program to strengthen the alignment of long-term incentives with the Company’s business objectives. As a result, the Committee set goals for the 2017 long term incentive program that were based strictly upon Adjusted EBITDA margin improvement instead of an absolute target. The Committee also determined that the modifier to potentially increase payouts was no longer warranted. Finally, the Committee did not believe any change was necessary for the 2017 annual incentive program, which was based on Adjusted EBITDA absolute targets, consistent with prior years.

CFO Compensation

Our former Chief Financial Officer separated from the Company in 2017, and, as a result, he received severance payments consistent with his employment agreement plus an additional cash payment of $1.25 million. The additional cash payment was made in recognition of an amendment to our former Chief Financial Officer’s employment agreement in 2016, which significantly reduced the amount of severance payable in a separation. The additional cash payment was substantially less than the additional severance that would have been payable had the separation occurred prior to the employment agreement amendment. The compensation we paid in 2017 to our interim Chief Financial Officer reflects his assignment when he assumed the role, a pro-rated annual base salary of $575,000 and an annual incentive target, as a percentage of base salary, of 80%. However, as discussed above, no amounts were paid to our interim Chief Financial Officer under the annual incentive program.

Special Incentives

In September 2017, the Compensation Committee sought to recognize certain named executive officers for their leadership in addressing challenges the Company’s business faced from industry headwinds in both 2016 and 2017, which were out of management’s control and greatly contributed to below-target annual incentive payouts in 2015 and 2016, below-target or no payouts under the 2017 annual incentive program, and that performance-based long-term incentives were not expected to vest in 2018-2020. Accordingly, the Committee awarded special one-time long-term incentives to two key business leaders, our President, Americas and our President, International, with grant date values of $1.7 million, and $650,000, respectively. The values of these special awards were significantly less than the target amounts of the incentives that were not, or were not expected to be, paid to these executives. The awards were also intended to acknowledge the importance of retaining experienced management in a highly competitive, cyclical and fast evolving industry.

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About the Annual Meeting

Why am I receiving these proxy materials?

The Board of Directors (the “Board”) of Avis Budget Group, Inc. (the “Company” or “Avis Budget”) is soliciting your vote at the 2018 Annual Meeting of Shareholders, and any adjournment or postponement thereof (the “Meeting”), to be held [●], 2018 at [●] Eastern Time, at [●], for the purposes set forth in this Proxy Statement.

These materials also include a WHITE proxy card for the Meeting. WHITE proxy cards are being solicited on behalf of the Board. The proxy materials include detailed information about the matters that will be discussed and voted on at the Meeting and provide updated information about the Company that you should consider in order to make an informed decision when voting your shares.

On or about [●], 2018, the Company will first mail to certain shareholders of record the Notice of Internet Availability of Proxy Materials containing instructions on how to access this Proxy Statement online, or, in the alternative, request a paper copy of the proxy materials and a WHITE proxy card, and also will first mail to certain other shareholders this Proxy Statement and a WHITE proxy card.

When and where will the Meeting be held?

The Meeting is scheduled to be held at [●] Eastern Time, on [●], 2018, at [●].

Why have I received different color proxy cards?

SRS Investment Management, LLC and certain of its affiliates (collectively, “SRS”) have notified the Company that SRS intends to propose five director nominees for election at the Meeting in opposition to director nominees recommended by the Board. The Company has provided you with the enclosed WHITE proxy card. SRS may send you a [color] proxy card.

The Board recommends using the enclosed WHITE proxy card to vote FOR ALL of the Board’s nominees for director. The Board also recommends that you DISREGARD the [color] proxy card.

What items will I be voting on and what are the Board’s voting recommendations?

Could other matters be decided at the Meeting?

The Board is not aware of any other matters to be brought before the Meeting. However, if any other matters properly come before the Meeting, the individuals named as proxies, or their duly constituted substitutes acting at the Meeting, will be authorized to vote or otherwise act thereon in accordance with their judgment on such matters.

How many votes do I have?

You will have one vote for every share of the Company’s common stock, par value $0.01 per share (the “Common Stock”), you owned as of the close of business on [●], 2018 (the “Record Date”).

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How many votes can be cast by all shareholders?

[●] votes, consisting of one vote for each share of Common Stock outstanding on the Record Date. There is no cumulative voting, and the holders of the Common Stock vote together as a single class.

How many votes must be present to hold the Meeting?

One-third of the outstanding shares of Common Stock entitled to vote at the Meeting, or [●] votes, must be present, in person or by proxy, to constitute a quorum at the Meeting. Abstentions and broker non-votes, if any, will be counted for the purpose of determining whether a quorum is present.

How many votes are required to elect directors and adopt the other proposals?

Because we have received notice from SRS that it intends to nominate persons for election to the Board, the provisions of our Amended and Restated By-laws (the “By-laws”) relating to majority voting for directors will not be applicable at the Meeting and, pursuant to our By-laws, plurality voting will instead apply.

The twelve nominees for director who receive the most votes of all votes cast for directors will be elected. If you do not vote for a particular nominee, or if you indicate on your proxy card, via the Internet or by telephone that you want to withhold authority to vote for a particular nominee, then your shares will not be voted for that nominee.

It will NOT help elect our Board’s nominees if you sign and return a proxy card sent by SRS, even if you withhold on SRS’s director nominees using SRS’s proxy card. Doing so will cancel any previous vote you may have cast on our WHITE proxy card. The only way to support our Board’s nominees is to vote for the Board’s nominees on our WHITE proxy card and to DISREGARD, and not return, any proxy card that you receive that is not a WHITE proxy card, including any [color] proxy card that you receive from SRS.

Pursuant to our By-laws, written notice by shareholders of qualifying nominations for election to the Board must have been received by our Secretary by February 15, 2018. We did not receive any such nominations, other than the nominations from SRS, and no other nominations for election to the Board may be made by shareholders at the Meeting.

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If for some reason any of the Board’s director nominees are unable to serve, or for good cause will not serve if elected, the persons named as proxies may vote for a substitute nominee recommended by the Board and, unless you indicate otherwise on the WHITE proxy card, your shares will be voted in favor of the Board’s remaining nominees. If any substitute nominees are designated prior to the Meeting, the Company will file an amended proxy statement that, as applicable, identifies the substitute nominees, discloses that such nominees have consented to being named in the revised proxy statement and to serve if elected, and includes certain biographical and other information about such nominees required by the rules of the SEC.

In the event SRS were to withdraw its nominees, such that there would no longer be a contested election, the majority voting provisions of our By-laws would apply. In such case, pursuant to the majority voting provisions of our By-laws, each incumbent director is required to submit a contingent, irrevocable resignation that the Board may accept if the director fails to receive the required vote for election or re-election in an uncontested election. The Corporate Governance Committee is required to make a recommendation to the Board as to the action to be taken with respect to the tendered resignation. The Board is required to act on the resignation within 90 days of the date of certification of election results.

What is a broker non-vote?

A broker non-vote occurs when a broker does not have discretion to vote on a particular proposal and the broker has not received instructions from the beneficial owner of the shares of Common Stock as to how to vote on such proposal. If you hold your shares of Common Stock in “street name” and do not provide voting instructions to your broker within the required time frame before the Meeting, your shares of Common Stock will not be voted by the broker. Because SRS has indicated its intention to deliver proxy materials in opposition to the nominees recommended by our Board to your broker to forward to you on SRS’s behalf, with respect to accounts to which SRS mails its proxy materials, brokers will not have discretion to vote on “routine matters,” including Proposal 2, in the event of a contested vote at the Meeting. As a result, if you do not instruct your broker on how to vote your shares regarding the election of directors, the ratification of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for fiscal year 2018 and the advisory approval of the compensation of our named executive officers, then your shares may not be voted on these matters. We urge you to instruct your broker about how you wish your shares to be voted.

How do I vote?

Whether you are a registered shareholder or hold any of your shares in “street name,” such as in a stock brokerage account or through a bank or other nominee, you may vote in the following ways:

The deadline for voting by telephone or by Internet will vary depending upon how you vote your shares—please follow the instructions shown on your WHITE proxy card or WHITE voting instruction form.

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You should submit your WHITE proxy card or WHITE voting instructions as soon as possible. Enclosed with this Proxy Statement is a WHITE proxy card for registered shareholders (that is, if you hold your stock directly in your name through our transfer agent) or a WHITE voting instruction form for beneficial owners (if your shares are held in “street name”).

If you are not the shareholder of record, please refer to the voting instructions provided by your bank, broker or other nominee to direct it how to vote your shares. Your vote is important.

Certain of our shareholders hold their shares in more than one account and may receive separate proxy cards or voting instruction forms for each of those accounts. To ensure that all of your shares are represented at the Meeting, we recommend that you vote every WHITE proxy card or WHITE voting instruction form you receive.

Additionally, please note that SRS has stated its intention to nominate five director nominees for election at the Meeting. If SRS proceeds with its nominations, you may receive proxy solicitation materials from SRS, including an opposition proxy statement and a [color] proxy card. Our Board recommends that you DISREGARD and do not return any [color] proxy card that you receive from SRS. Voting to “withhold” with respect to any SRS nominee on a [color] proxy card sent to you by SRS is not the same as voting “for” our Board’s nominees because a vote to “withhold” with respect to any SRS nominee on its [color] proxy card will revoke any proxy you previously submitted.

Can I change my vote?

Yes. You may revoke your proxy at any time prior to the voting at the Meeting if, in accordance with the voting procedures described above, you:

If your shares are held in “street name” (i.e., the shares are held of record by a broker, bank or other nominee) and you wish to revoke a proxy, you should contact your bank, broker or nominee and follow its procedures for changing your voting instructions. You also may vote in person at the Meeting if you obtain a legal proxy from your bank, broker or other nominee.

If you have previously signed a [color] proxy card sent to you by SRS or otherwise voted according to instructions provided by SRS, you may change your vote by marking, signing, dating and returning the enclosed WHITE proxy card in the accompanying postage-paid envelope or by voting by telephone or via the Internet by following the instructions on the WHITE proxy card. Submitting a [color] proxy card sent to you by SRS will revoke votes you have previously made by the Company’s WHITE proxy card. Accordingly, if you wish to vote pursuant to the recommendation of the Board, you should mark, sign, date and return a WHITE proxy card and DISREGARD any [color] proxy card that you may receive from SRS.

Only the latest validly executed proxy that you submit will be counted.

What if I do not vote with respect to some of the proposals?

Shares of Common Stock represented by proxies received by the Company (whether through the return of a WHITE proxy card or WHITE voting instruction form) that do not contain voting instructions (or if you vote by telephone or electronically via the Internet without indicating how you want to vote) will be voted in accordance with the recommendations of the Board, including:

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Has the Company received notice from one or more shareholders that they intend to nominate director candidates at the Meeting?

Yes. SRS has delivered notice to the Company of its intention to nominate five director candidates for election to the Board at the Meeting to serve for a term of one year expiring at the 2019 annual meeting of shareholders and until his or her successor is duly elected and qualified or until his or her earlier resignation or removal

Will my shares be voted if I do nothing?

If your shares of our common stock are registered in your name, you must sign and return a proxy card or submit a proxy by telephone or by Internet in order for your shares to be voted.

If your shares of Common Stock are held in “street name,” that is, held for your account by a broker, bank or other nominee, and you do not instruct your broker or other nominee how to vote your shares, then, to the extent your broker or other nominee has forwarded you SRS’s proxy materials, your broker or other nominee would not have discretionary authority to vote your shares on the proposals to be considered at the Meeting. If your shares of our Common Stock are held in “street name,” your broker, bank or nominee has enclosed a WHITE voting instruction form with this Proxy Statement. We strongly encourage you to authorize your broker or other nominee to vote your shares by following the instructions provided on the WHITE voting instruction form.

To return your WHITE voting instruction form to your broker or other nominee by proxy, simply sign, date and return the enclosed WHITE voting instruction form in the accompanying postage-paid envelope, or vote by proxy by telephone or via the Internet in accordance with the instructions in the WHITE voting instruction form. Please contact the person responsible for your account to ensure that a WHITE proxy card or WHITE voting instruction form is voted on your behalf.

We strongly urge you to vote by proxy FOR ALL of the nominees listed in Proposal 1, and FOR Proposals 2 and 3 by using the enclosed WHITE proxy card to vote TODAY by Internet, by telephone or by signing, dating and returning the enclosed WHITE proxy card in the envelope provided. If your shares are held in “street name,” you should follow the instructions on the WHITE voting instruction form provided by your broker or other nominee and provide specific instructions to your broker or other nominee to vote as described above.

How do participants in savings plans vote?

If you hold shares of Common Stock in the “Avis Budget Group, Inc. Employee Savings Plan” or the “AB Car Rental Services Retirement Savings Plan for Bargaining Hourly Employees” (collectively, the “Savings Plans”), you will receive a WHITE voting instruction form that covers shares of Common Stock held for you in the Savings Plans. In accordance with the provisions of the Savings Plans, the respective trustees will vote your shares of Common Stock as you have directed. If you timely submit your voting instructions to the trustees of the Savings Plans by following the instructions on the enclosed WHITE voting instruction form, your shares will be voted as you have directed. To the extent such instructions are not received prior to [●] Eastern Time on [●], 2018, the trustees of the Savings Plans will vote the shares of Common Stock with respect to which they have not received instructions proportionately in accordance with the shares of Common Stock for which they have received instructions. Instructions given with respect to shares of Common Stock in accounts of the Savings Plans may be changed or revoked only in writing, and no such instructions may be revoked after [●] Eastern Time on [●], 2018. Participants in the Savings Plans are not entitled to vote in person at the Meeting.

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How do participants in the Avis Budget Group, Inc. Employee Stock Purchase Plan (“ESPP”) vote?

If you hold shares of Common Stock in the ESPP, you will receive a WHITE voting instruction form that covers shares of Common Stock held for you in the ESPP. In accordance with the provisions of the ESPP, the plan administrator will vote your shares of Common Stock as you have directed. Voting instructions must be submitted to the plan administrator prior to [●] Eastern Time on [●], 2018 by following the instructions on the enclosed WHITE voting instruction form for your shares to be voted as you have directed. If you do not provide instructions to the plan administrator by [●] Eastern Time on [●], 2018, the plan administrator will not vote your shares.

Do I need a ticket to attend the Meeting?

Yes. Admission will be by ticket only. Admission to the Meeting will be expedited if tickets are obtained in advance.

Attendance at the Meeting will be limited to shareholders as of the Record Date, their authorized representatives and guests of the Company. Tickets may be issued to others at the discretion of the Company. In accordance with the Company’s security procedures, all persons attending the Meeting must present picture identification along with their admission ticket or proof of beneficial ownership in order to gain admission. Cameras and recording devices will not be permitted at the Meeting.

Even if you plan to attend the Meeting, we strongly urge you to vote in advance by proxy by signing and dating the enclosed WHITE proxy card and returning it in the postage-paid envelope provided or by voting via the Internet or by telephone by following the instructions provided on the enclosed WHITE proxy card.

How can I find the voting results of the Annual Meeting?

Voting results will be tallied by the inspector of election. The Company will report the preliminary results in a Current Report on Form 8-K, to be filed with the SEC within four business days following the Meeting, and the final results as soon as practicable following certification by the inspector of election.

How can I access the Company’s proxy materials and annual report electronically?

This Proxy Statement and the Company’s 2017 Annual Report may be viewed online at www.eproxyaccess.com/car2018. If you are a shareholder of record, you can elect to receive future annual reports and proxy statements electronically by enrolling at www.eproxyaccess.com/car2018. If you choose this option, you will receive a proxy form in April 2019 listing the website locations where proxy materials will be posted, and your choice will remain in effect until you notify us by mail that you wish to resume mail delivery of these documents. If you hold your shares of Common Stock through a bank, broker or another holder of record, refer to the information provided by that entity for instructions on how to elect this option.

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How does a shareholder nominate someone to be a director?

Director nominations may be made by a shareholder so long as the qualifying shareholder follows the procedures outlined in the By-laws. Pursuant to the By-laws, for a nomination to be made by a shareholder, such shareholder must have given the proper notice within the specific time limits set forth in the relevant provision therein. For the 2019 annual meeting, the Company must receive this notice on or before [●], 2019. Such notice and nomination should be submitted in writing to the Corporate Secretary of the Company and should include the information required for shareholder nominations set forth in the By-laws.

A copy of the full text of the provision of the By-laws describing the procedure for shareholder nominations may be accessed in the “Investor Relations-Corporate Governance” section of the Company’s website at www.avisbudgetgroup.com. Nothing contained in any section of the Company’s website is incorporated by reference into this Proxy Statement.

Who pays for the Company’s proxy solicitation?

The Company will bear the cost of the solicitation of proxies by the Company. For additional information regarding the cost of this solicitation, please see the section titled “Additional Information—Costs of Solicitation” on pages 69-70 of this Proxy Statement.

Who should I call if I have questions about the Meeting?

If you have any questions or require any assistance with voting your shares, or if you need additional copies of the proxy materials, please contact our proxy solicitation firm, Innisfree M&A Incorporated, at:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

Shareholders may call toll-free at (877) 687-1866

Banks and brokers may call collect at (212) 750-5833

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Background of the Solicitation

From October 12, 2010 through January 2016, SRS Investment Management, LLC and certain of its affiliates (collectively, “SRS”) made Schedule 13G filings with the Securities and Exchange Commission (the “SEC”) indicating ownership of more than 5% of the Company’s common stock and reflecting a passive investment intent with respect to the Company. From time to time during this period, Karthik Sarma, the Managing Partner of SRS, and representatives of the Company and its board of directors (the “Board”) engaged in discussions regarding the Company’s operations and strategy.

On January 13, 2016, Mr. Sarma met with Ronald Nelson, Executive Chairman of the Company, and Mr. De Shon, Chief Executive Officer of the Company, and stated that SRS had changed its intentions with respect to the Company and that SRS would be filing a Schedule 13D within ten days reflecting that SRS may pursue activities having the purpose or effect of changing or influencing the control of the Company. Mr. Sarma also communicated that SRS was the owner of approximately 20% of the Company’s stock (with 9.5% in direct ownership providing for voting rights and an additional 10.5% in cash-settled equity swaps that did not convey voting rights) and sought three seats on the Board, including two SRS insiders. Mr. Sarma stated that during this ten-day period SRS was prepared to enter into an agreement with the Company in which SRS would be provided with this Board representation. On January 15, 2016, the Board formed an ad hoc committee (the “Ad Hoc Committee”) to manage the response to and discussions with SRS regarding these matters. Between January 15, 2016 and January 25, 2016, the Ad Hoc Committee and the Board met a number of times to discuss the terms of a potential cooperation agreement with SRS, including Board representation for SRS as well as standstill provisions which, among other things, would prevent SRS from taking a position of control in the Company without paying an appropriate control premium to the Company’s other shareholders. During this period, representatives of the Company and SRS negotiated and exchanged drafts of a cooperation agreement, with input from the Ad Hoc Committee and the Board.

On January 25, 2016, the Company and SRS entered into a cooperation agreement (the “Initial Cooperation Agreement”) pursuant to which the Company agreed to increase the size of the Board from 11 to 12 directors and appoint Brian J. Choi, an SRS investment professional, to the Board and the Compensation Committee. The Company also agreed to further increase the size of its Board by one additional director and appoint an additional independent director recommended by SRS. SRS agreed to abide by certain standstill provisions during a standstill period ending 30 days prior to the deadline for the submission of nominations of director candidates for the Company’s 2017 annual meeting of shareholders. SRS also agreed to vote all shares of the Company’s common stock owned by SRS in favor of the Company’s nominees and other proposals at the 2016 Annual Meeting, subject to certain limited exceptions.

Also on January 25, 2016, the Company announced that it had increased the Company’s share repurchase authorization by $300 million.

Also on January 25, 2016, SRS filed a Schedule 13D with the SEC reporting its entry into the Initial Cooperation Agreement and disclosing beneficial ownership of 9.5% of the Company’s outstanding common stock and economic exposure to an additional approximately 10.5% of the Company’s outstanding common stock pursuant to cash-settled equity swaps. The Schedule 13D and subsequent Schedule 13D amendments of SRS did not provide the underlying documentation for these swap agreements.

On January 27, 2016, in connection with the execution of the Initial Cooperation Agreement, Mr. Sarma and the Company entered into a confidentiality agreement that would permit Mr. Sarma to be invited to

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Company board meetings as an invited observer. From January 27, 2016 through January 2018, Mr. Sarma was invited to participate in regularly scheduled quarterly Company board meetings as an observer and was provided with materials that were distributed to Board members.

Effective January 27, 2016, Mr. Choi was appointed as a director pursuant to the Initial Cooperation Agreement and the size of the Board was increased from 11 to 12 directors. Mr. Choi was subsequently appointed to the Compensation Committee.

Over the course of the ensuing months, the Company continued to engage SRS in frequent dialogue regarding the Company’s performance and strategy.

On March 4, 2016, SRS filed an amended Schedule 13D with the SEC disclosing beneficial ownership of 9.8% of the Company’s outstanding common stock and economic exposure to an additional approximately 12.9% of the Company’s outstanding common stock pursuant to cash-settled equity swaps.

On March 18, 2016, pursuant to the Initial Cooperation Agreement, the size of the Board was increased from 12 to 13 directors and the Board appointed Sanoke Viswanathan as a director of the Company. Although the Initial Cooperation Agreement provided that Mr. Viswanathan would be appointed to the Company’s Corporate Governance Committee if requested by SRS, at no time did SRS make such a request.

On June 3, 2016, SRS filed an amended Schedule 13D with the SEC disclosing beneficial ownership of 9.5% of the Company’s outstanding common stock and economic exposure to an additional approximately (i) 13.7% of the Company’s outstanding common stock pursuant to cash-settled equity swaps and (ii) 2.3% of the Company’s outstanding common stock pursuant to cash-settled options.

Between October 2016 and January 2017, representatives of SRS and the Company held a number of meetings and other discussions regarding a possible renewal of the Initial Cooperation Agreement and exchanged drafts of an amended and restated cooperation agreement. Throughout January 2017, the Board and the Ad Hoc Committee met a number of times and discussed options for renewing the Initial Cooperation Agreement with SRS in light of the scheduled expiration of its standstill provisions on January 25, 2017.

On January 19, 2017, SRS filed an amended Schedule 13D with the SEC to reflect its beneficial ownership of 9.7% of the Company’s outstanding common stock and economic exposure to an additional approximately (i) 15.4% of the Company’s outstanding common stock pursuant to cash-settled equity swaps and (ii) 3.4% of the Company’s outstanding common stock pursuant to certain cash-settled options.

Also on January 19, 2017, Alun Cathcart, a former executive of the Company, announced that he would retire from the Board effective on February 28, 2017.

As a result of the inability of the parties to reach agreement on the terms of a renewed cooperation agreement and in anticipation of the expiration of the standstill provisions of the Initial Cooperation Agreement on January 25, 2017 and the potential for SRS to acquire effective control of the Company without paying a control premium (including in light of the Company’s ongoing share repurchase program), on January 23, 2017, the Company adopted a short-term shareholder rights plan (the “2017 Rights Plan”). Despite the failure of SRS to agree to a renewal of the cooperation agreement, the Governance Committee and the Board included Messrs. Choi and Viswanathan as nominees for election as directors at the 2017 Annual Meeting of Shareholders.

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On April 20, 2017, representatives of the Company and SRS reengaged to discuss the possibility of entering into a new cooperation agreement. Over the course of the ensuing two weeks, the parties negotiated terms and shared drafts of an amended and restated cooperation agreement, with input from the Ad Hoc Committee and the Board.

On May 3, 2017, the Company and SRS entered into an Amended and Restated Cooperation Agreement (the “Amended Cooperation Agreement”) pursuant to which the Company continued to nominate Mr. Choi and Mr. Viswanathan as directors and SRS agreed to abide by certain standstill provisions through the earlier of January 25, 2018 and 30 days prior to the deadline for the submission of shareholder nominations of director candidates at the Company’s 2018 Annual Meeting of Shareholders (the “2018 Annual Meeting”). During the standstill period, SRS agreed not to (among other things) acquire voting power over more than 12 million shares of the Company’s common stock (representing approximately 14% of the Company’s outstanding common stock at the time) and agreed to vote its shares of Company common stock in favor of the Company’s nominees and other proposals at any meeting of the Company’s shareholders occurring during the standstill period, subject to certain limited exceptions. The standstill provision in the Amended Cooperation Agreement did not contain any limitation on acquiring cash-settled derivatives that do not convey voting rights.

On May 3, 2017, the Company also disclosed an amendment to the 2017 Rights Plan that accelerated the expiration of the 2017 Rights Plan from January 22, 2018 to May 3, 2017.

On May 4, 2017, SRS filed an amended Schedule 13D reporting the Amended Cooperation Agreement and disclosing beneficial ownership of 9.9% of the Company’s outstanding common stock and economic exposure to an additional approximately (i) 19.3% of the Company’s outstanding common stock pursuant to cash-settled equity swaps and (ii) 0.1% of the Company’s outstanding common stock pursuant to cash-settled options.

Over the course of the ensuing months, the Company continued to engage SRS in frequent dialogue regarding the Company’s performance and strategy.

On December 11, 2017, in light of the upcoming expiration of the standstill provision of the Amended Cooperation Agreement on January 15, 2018, at the Company’s initiation Messrs. Nelson and Leonard Coleman, the Company’s lead independent director, met with Messrs. Sarma and Jagdeep Pahwa, President of SRS Investment Management. The parties discussed, among other things, the performance of the Company and the composition of the Board. During the meeting, the representatives of SRS expressed that they believed SRS should have additional representation on the Board.

Also on December 11, 2017, SRS filed an amended Schedule 13D with the SEC, which disclosed an approximately 14.7% ownership stake in the Company. In the amended Schedule 13D, SRS also disclosed that it had economic exposure to an additional approximately (i) 16% of the Company’s outstanding common stock pursuant to cash-settled equity swaps and (ii) 0.1% of the Company’s outstanding common stock pursuant to cash-settled options.

Between December 17, 2017 and January 14, 2018, including as set forth below, the Ad Hoc Committee met a number of times to discuss the Company’s engagement efforts with SRS and potential terms of a new cooperation agreement with SRS. In addition, the Ad Hoc Committee discussed the potential adoption of a shareholder rights plan in the event that SRS was unwilling to enter into a renewed standstill on mutually acceptable terms.

On January 4, 2018, the Board met to discuss matters related to SRS. Mr. Nelson summarized the December 11, 2017 meeting held between himself and Mr. Coleman and Messrs. Sarma and Pahwa.

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Mr. Nelson noted the upcoming January 15, 2018 termination date of the Amended Cooperation Agreement. Following the meeting of the Board, a meeting of the Ad Hoc Committee was convened at which these matters were discussed further.

On January 6, 2018, as part of the Company’s regular engagement efforts with SRS, Mr. De Shon met with Mr. Sarma to discuss with Mr. Sarma the performance and strategy of the Company, including the ongoing search for a permanent chief financial officer. At the same time, Mr. Coleman met with Mr. Pahwa to discuss, among other things, the composition of the Board and the performance and strategy of the Company. At the conclusion of the meeting between Mr. De Shon and Mr. Sarma, Messrs. De Shon and Sarma joined the meeting of Messrs. Coleman and Pahwa. Mr. Sarma indicated that SRS believed that the Board needed to be refreshed, but stated that SRS did not have a concern with the performance of any individual member of the Board. Mr. Coleman noted that the Board had already begun an ongoing Board refreshment process. Mr. Sarma also stated that SRS wanted to participate in the selection of any new directors. In particular, Mr. Sarma initially proposed that the size of the Board be reduced to nine directors, with six incumbent directors stepping down, Mr. Pahwa joining the Board, Messrs. Choi and Viswanathan to remain on the Board, and two new directors to be appointed with input from SRS. After further discussion with Mr. Coleman, Mr. Sarma ultimately proposed that the size of the Board be reduced to eleven directors, with four incumbent directors stepping down, Mr. Pahwa joining the Board, Messrs. Choi and Viswanathan to remain on the Board, and two new directors to be appointed with input from SRS. During the course of this discussion, Mr. Sarma expressed support for the Company’s management team, in particular Mr. De Shon, and the manner in which Mr. De Shon had been operating the business.

On January 8, 2018, the Ad Hoc Committee met to discuss the January 6, 2018 meetings that Messrs. De Shon and Coleman had with Messrs. Sarma and Pahwa. The Ad Hoc Committee again considered the Company’s willingness to enter into a renewed cooperation agreement with SRS on mutually agreeable terms. The members of the Ad Hoc Committee authorized representatives of the Company to provide representatives of SRS with a proposal for a renewed cooperation agreement.

On January 9, 2018, representatives of the Company sent to representatives of SRS a term sheet for a renewed cooperation agreement with SRS. In the term sheet, the Company proposed that, among other things, (i) an additional SRS representative (Mr. Pahwa) would join the Board and the Corporate Governance Committee, (ii) three current directors selected by the Corporate Governance Committee would not stand for reelection at the 2018 Annual Meeting, (iii) two new independent directors selected by the Corporate Governance Committee would be nominated at the 2018 Annual Meeting, (iii) the Corporate Governance Committee would directly consult with SRS in selecting the two new independent directors, (iv) the size of the board would be reduced to 11 members following the first resignation of a current director occurring after the 2018 Annual Meeting and (v) a three-year standstill on the same terms as the expiring standstill which would continue for as long as all remaining SRS directors are renominated for election at the next upcoming annual meeting and one of the SRS directors (or their replacements) remained on the Board.

Later that day, representatives of SRS provided a revised term sheet to representatives of the Company. In the revised term sheet, SRS proposed that, among other things, (i) SRS be permitted under the revised standstill to acquire up to 25,000,000 shares of Company common stock (which would represent approximately 31% of the Company’s outstanding voting power), (ii) an additional SRS representative (Mr. Pahwa) would join the Board, the Corporate Governance Committee and the Executive Committee, (iii) four current directors named in the cooperation agreement would not stand for reelection at the 2018 Annual Meeting, (iv) two new independent directors unanimously approved by the Corporate Governance Committee (which would include Mr. Pahwa as a member) would be nominated at the 2018 Annual Meeting, (v) in the event of a deadlock of the Corporate Governance Committee, the two new independent directors would be selected by SRS with the reasonable

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approval of the Board, (vi) a reduction in the size of the board to 11 members immediately following the 2018 Annual Meeting and (vii) a standstill term of one year.

On January 10, 2018, Mr. Coleman spoke with Messrs. Sarma and Pahwa to discuss the terms of a potential renewal of the cooperation agreement. During the course of this conversation, Messrs. Sarma and Pahwa expressed that SRS would not agree to a standstill of more than one year or agree to be subject to a limitation on ownership of less than its entire current position (approximately 31% of the Company’s outstanding voting power).

On January 11, 2018, the Ad Hoc Committee met to discuss Mr. Coleman’s communications with Messrs. Sarma and Pahwa and to consider again the terms of a potential renewed cooperation agreement with SRS. The members of the committee agreed that, in the event that an agreement with SRS could not be reached on mutually agreeable terms, the Board should consider implementing a shareholder rights plan to take effect upon the expiration of the standstill.

On January 13, 2018, Mr. Coleman and Mr. Sarma spoke and discussed the terms of a potential agreement. Mr. Sarma stated that SRS would not agree to a standstill provision longer than one year. In addition, Mr. Sarma stated that SRS wanted to have the right to own and vote 20% of the outstanding shares of common stock.

Later that day, the Ad Hoc Committee met to discuss the positions that Mr. Sarma conveyed to Mr. Coleman. The committee determined to propose a standstill that would have an agreed initial term and would then continue for as long as any SRS appointees remained on the Board.

Following the January 13, 2018 Ad Hoc Committee Meeting, Mr. Coleman called Mr. Sarma to inform him of the Company’s revised proposal. Later that day, Mr. Sarma responded to Mr. Coleman that SRS was unwilling to agree to a standstill beyond one year.

On January 14, 2018, the Ad Hoc Committee reconvened to discuss matters related to SRS. The Ad Hoc Committee determined that, despite the Company’s good faith efforts and strong preference to resolve the Company’s concerns regarding SRS through a renewal of the cooperation agreement, SRS was unwilling to agree to a cooperation agreement on reasonable terms and that therefore the Ad Hoc Committee would recommend to the Board that a shareholder rights plan be adopted to address the risk of SRS acquiring “creeping control.”

Later on January 14, 2018, the Board met to discuss matters relating to SRS. Mr. Nelson reported that the Ad Hoc Committee had met several times since the January 4, 2018 Board meeting and that the Company had been unable to reach an agreement with SRS, noting that the then-current standstill was set to expire on January 15, 2018 and that the Ad Hoc Committee recommended that a new shareholder rights plan be adopted. After deliberation and presentations from representatives of the Company, the Board resolved to adopt the shareholder rights plan by a vote of 11 to 1.

Later on January 14, 2018, the Company adopted a new short-term shareholder rights plan (the “2018 Rights Plan”). The 2018 Rights Plan contains the following key features: (i) a one-year term, (ii) a 15% trigger, (iii) cash-settled derivatives that do not convey voting rights do not count as beneficial ownership under the rights plan, (iv) no aggregation of ownership of shareholders “acting in concert” unless they have formed a group under applicable securities laws, (v) a qualifying offer provision that exempts tender and exchange offers supported by two-thirds of the unaffiliated shareholders from triggering the rights plan, (vi) no “dead-hand,” “slow-hand,” “no-hand,” or similar feature that limits the ability of a future board of directors to redeem the rights plan and (vii) a “grandfathering” provision providing that an existing 15% shareholder would not trigger the rights unless they acquire additional shares.

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On January 15, 2018, the Company issued a press release announcing the adoption of the shareholder rights plan to protect shareholders against “creeping control” by SRS. The press release also highlighted the Board’s ongoing refreshment process.

On January 16, 2018, SRS filed an amended Schedule 13D with the SEC, which disclosed an approximately 14.7% ownership stake in the Company and the expiration of the Amended Cooperation Agreement. In addition, the amended Schedule 13D stated that SRS may, among other things, increase its ownership in the Company and seek increased Board representation.

On January 31, 2018, the Ad Hoc Committee met to discuss the Company’s recent engagement with SRS. The Ad Hoc Committee considered potential options for a renewed agreement in light of Mr. Sarma’s continued unwillingness to agree to a standstill period in excess of one year and his stated desire for SRS to maintain the right to own 20% of the shares of common stock. On February 5, 2018, the Ad Hoc Committee met to again discuss the terms of a potential agreement with SRS.

On February 9, 2018, Mr. Coleman called Mr. Sarma to discuss the potential terms of a renewed cooperation agreement. Later that day, representatives of the Company shared with representatives of SRS a revised term sheet reflecting, among other things, (i) a standstill of an agreed initial period, with the standstill continuing thereafter for so long as all remaining SRS directors are renominated by the Board for election at the next upcoming annual meeting and any SRS appointee (or their replacements) is on the Board and (ii) an ownership cap of 20%, with shares in excess of 15% to be voted proportionately with non-SRS shareholders for so long as SRS continues to own more than 15% of the Company’s outstanding common stock.

On February 12, 2018, Mr. Coleman and Mr. Nelson met with Mr. Sarma to discuss the terms of a potential agreement. Mr. Sarma rejected the terms proposed by the Company in the February 9th term sheet. During the conversation, Mr. Sarma stated that SRS intended to nominate directors for election to the Board at the 2018 Annual Meeting and mentioned Carl Sparks and Matthew Espe as potential candidates.

On February 13, 2018, the Ad Hoc Committee met to discuss the terms of a potential agreement with SRS. The consensus of the Ad Hoc Committee was that Mr. Sarma’s demands for additional SRS representation on the Board, combined with a 20% ownership limit (including in light of the Company’s share repurchase activity), would subject the Company to the risk of “creeping control” by SRS that could harm the Company’s other shareholders. Mr. Coleman was then asked by the other members of the committee to inform Mr. Sarma that the Company wished to proceed with the terms proposed to SRS on February 9, 2018, and which SRS had yet to respond to in writing.

On February 14, 2018, Mr. Coleman called Mr. Sarma to reiterate the Company’s willingness to enter into a renewal of the negotiated standstill on the terms shared with representatives of SRS on February 9, 2018.

Later on February 14, 2018, SRS delivered a notice to the Company of its intention to nominate five individuals to stand for election to the Board at the 2018 Annual Meeting: Messrs. Choi, Viswanathan, Pahwa, Sparks and Espe.

On February 15, 2018, SRS filed an amended Schedule 13D with the SEC that disclosed an approximately 14.7% ownership stake in the Company and that SRS had economic exposure to an additional approximately (i) 16% of the Company’s outstanding common stock through derivative instruments and (ii) 0.1% of the Company’s outstanding common stock pursuant to cash-settled options.

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Later on February 15, 2018, the Company publicly issued a statement confirming that it had received SRS’s nomination notice and indicating that the Corporate Governance Committee would review SRS’s proposed director nominees and make a recommendation regarding such nominees that it believed was in the best interest of all shareholders.

On February 20, 2018, the Corporate Governance Committee met to consider potential director nominees, including SRS’s proposed director nominees.

On February 26, 2018, on behalf of the Company’s Corporate Governance Committee, Jean Sera, Senior Vice President & Corporate Secretary of the Company, contacted David Zales, General Counsel of SRS, to invite Messrs. Espe, Pahwa and Sparks to interview with the Corporate Governance Committee in order to permit the Corporate Governance Committee to evaluate the new SRS nominees consistent with the Company’s director nomination procedures.

On March 7, 2018, Mr. Zales contacted Ms. Sera and informed her that SRS would not permit Messrs. Espe, Pahwa or Sparks to meet with the Company’s Corporate Governance Committee.

On March 15, 2018, the Corporate Governance Committee met and evaluated each of the director candidates. The Corporate Governance Committee determined, based upon prior interactions with certain of the SRS nominees and its review of biographical and other information with respect to the nominees, that Messrs. Pahwa and Sparks be recommended for nomination by the Corporate Governance Committee as part of the Board refreshment process.

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Proposals to Be Voted On at Meeting

PROPOSAL NO. 1

ELECTION OF DIRECTORS

The Board of Directors (the “Board”) has nominated Larry D. De Shon, Mary C. Choksi, Leonard S. Coleman, Jeffrey H. Fox, Lynn Krominga, Glenn Lurie, Eduardo G. Mestre, Jagdeep Pahwa, F. Robert Salerno, Francis J. Shammo, Carl Sparks and Sanoke Viswanathan to be elected at the 2018 Annual Meeting of Shareholders (the “Meeting”) to serve as directors for a one-year term ending at the 2019 annual meeting of shareholders and until his or her successor is duly elected and qualified or until his or her earlier resignation or removal. Eight of the nominees for director are incumbent nominees and were each elected for one-year terms at the 2017 annual meeting. For certain information regarding each nominee, see “Board of Directors—Biographical Information for Nominees” below.

Each nominee has provided a consent permitting the Company to name such nominee in this Proxy Statement and stating that such nominee consents to serve if elected as a director.

The Board recommends using the enclosed WHITE proxy card to vote FOR ALL of the Board’s nominees for director. SRS has provided the Company with notice that it intends to nominate five individuals for election as directors at the Meeting. As a result, the election of directors is considered a contested election as defined in the Company’s Amended and Restated By-laws, and the twelve nominees receiving the highest number of “for” votes will be elected.

The Board recommends that you DISREGARD any [color] proxy card that may be sent to you by SRS. Voting to “withhold” with respect to any of SRS’s nominees on its [color] proxy card is NOT the same as voting “for” our Board’s nominees, because a vote to “withhold” with respect to any of SRS’s nominees on its proxy card will revoke any previous proxy submitted by you. If you have already voted using a [color] proxy card sent to you by SRS, you have every right to change your vote and we urge you to revoke that [color] proxy by voting in favor of our Board’s nominees by using the enclosed WHITE proxy card. Only the latest validly executed proxy that you submit will be counted.

Biographical Information for Nominees

The following material contains information concerning the Board’s nominees, including their period of service as a director (if any), their recent employment, other directorships, including those held during the past five years with a public company or registered investment company, and age as of the Meeting.

In addition to the information set forth below, Appendix A sets forth information relating to our directors, nominees for directors and certain of our officers and employees who may be considered “participants” in our solicitation under applicable Securities and Exchange Commission rules by reason of their position as directors of the Company, as nominees for directors or because they may be soliciting proxies on our behalf.

LARRY D. DE SHON

Board Committees: Executive

Mr. De Shon, age 58, has been a director since October 2015. Mr. De Shon has served as Chief Executive Officer and Chief Operating Officer of Avis Budget Group, Inc. since January 2016, and assumed the title of President in June 2017. Previously, Mr. De Shon held the title of President and Chief Operating Officer from October 2015 through December 2015, President, International from January 2015 until October 2015, President, Europe, Middle East and Africa (“EMEA”) from October 2011 until January 2015, and Executive Vice President, Operations from October 2006 to

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October 2011. Prior to joining the Company, Mr. De Shon spent 28 years at United Airlines, starting as a customer service representative and advancing to hold a number of positions of increasing responsibility during his tenure, including Senior Vice President positions in marketing, on-board service and global airport operations.

Specific Qualifications, Attributes, Skills and Experience:

MARY C. CHOKSI

Board Committees: Audit, Corporate Governance

Ms. Choksi, age 67, has been a director since March 2007. From August 2015 to January 2017, Ms. Choksi was a Senior Advisor at Strategic Investment Group (“Strategic”), an investment management group founded in 1987, which designs and implements global investment strategies for large institutional and individual investors. Previously, Ms. Choksi was Founding Partner and Senior Managing Director of Strategic. Within Strategic, Ms. Choksi was a member of the investment strategy group charged with overseeing the asset mix of globally diversified client portfolios, supervised reporting to all clients and had responsibilities in corporate planning. Ms. Choksi was also a Founding Partner and, until May 2011, a Managing Director at Emerging Markets Investors Corporation (“EMI”). EMI and its successor, Ashmore EMM, manage portfolios of marketable equities in the emerging markets of Asia, Europe, Latin America, Africa and the Middle East on behalf of institutional and private investors. Prior to the establishment of Strategic and EMI, Ms. Choksi worked in the Pension Investment Division of the World Bank, which was responsible for investing the institution’s pension plan. Before joining the Bank’s finance complex, she worked for nine years in the development arm of the Bank, working on South and Southeast Asia. Ms. Choksi is also a director of the following companies which file reports pursuant to the Exchange Act: White Mountains Insurance Group, Ltd. and Omnicom Group Inc. Ms. Choksi is a member of Omnicom’s Audit and Compensation Committees. Ms. Choksi also serves as a trustee of various mutual funds in the Franklin Templeton Funds family.

Specific Qualifications, Attributes, Skills and Experience:

LEONARD S. COLEMAN

Presiding Director

Board Committees: Compensation, Corporate Governance (Chair)

Mr. Coleman, age 69, has been a director of Avis Budget Group, Inc. since August 2006. Mr. Coleman was a Senior Advisor to Major League Baseball from 1999 to December 2005. Mr. Coleman was a director of Cendant Corporation from 1997 to August 2006. Mr. Coleman was the President of The National League of Professional Baseball Clubs from 1994 to 1999, having served from 1992 to 1994

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as Executive Director, Market Development of Major League Baseball. Previously, Mr. Coleman was a municipal finance banker for Kidder, Peabody & Company. Prior to joining Kidder, Mr. Coleman served as commissioner of the New Jersey Department of Community Affairs and the Department of Energy, and chairman of the Hackensack Meadowlands Development Commission and the New Jersey Housing and Mortgage Finance Agency. He also served as the vice chairman of the State Commission on Ethical Standards, and a member of the Economic Development Authority, Urban Enterprise Zone Authority, Urban Development Authority, State Planning Commission and New Jersey Public Television Commission. Mr. Coleman is also a director of the following corporations which file reports pursuant to the Exchange Act: Electronic Arts Inc., Hess Corporation and Omnicom Group Inc. Mr. Coleman previously served on the board of the following companies: Aramark Holdings Corporation and Churchill Downs Incorporated.

Specific Qualifications, Attributes, Skills and Experience:

JEFFREY H. FOX

Board Committees: Compensation

Mr. Fox, age 56, has been a director since July 2013. Mr. Fox has been President and Chief Executive Officer of Endurance International Group Holdings, Inc. since August 2017. Mr. Fox is also a principal of The Circumference Group LLC, an investment and advisory firm which he founded in 2009. Mr. Fox was President and Chief Executive Officer of Convergys Corporation from 2010 to November 2012, and then Executive Chairman until April 2013. Previously, Mr. Fox worked for Alltel Corporation as Chief Operating Officer from 2007 through 2008, and as a Group President from 1996 until 2007. Prior to joining Alltel, Mr. Fox worked in investment banking for ten years with Stephens Inc., preceded by two years with Merrill Lynch, specializing in mergers and acquisitions advisory services. Mr. Fox is also a director of Endurance and Convergys Corporation, which file reports pursuant to the Exchange Act. Mr. Fox previously served on the board of Blackhawk Network Holdings Inc.

Specific Qualifications, Attributes, Skills and Experience:

LYNN KROMINGA

Board Committees: Audit, Compensation

Ms. Krominga, age 67, has been a director since October 2006. Ms. Krominga is a management consultant and attorney. Since 1999, Ms. Krominga has been a consultant to private equity and venture capital investors, in which capacity she served in a number of operating and board positions, including Chief Executive Officer of Fashion Wire Daily, Inc.; Director and member of the Audit Committee of AHAVA, a global cosmeceuticals company; and advisor to London-based Apax Partners

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for acquisitions in Israel and the United States. She is the former President (and founder) of the Revlon Worldwide Licensing Division, and previously served as General Counsel and as International Counsel for Revlon’s global operations. From November 2008 until January 2013 (when the company was sold), Ms. Krominga served as Lead Director of Sunrise Senior Living, Inc. From March through November 2008, she served as Chairman of the Board of Sunrise Senior Living; as Chairman of the Compensation Committee from 2008 to 2011; and as a member of the Audit, Compensation and Governance Committees from 2007 to 2013. Prior to joining Revlon, she was an attorney at American Express Company and an associate at Cleary, Gottlieb, Steen & Hamilton.

Specific Qualifications, Attributes, Skills and Experience:

GLENN LURIE

Mr. Lurie, age 52, has been the Chief Executive Officer and a director of Synchronoss Technologies, Inc., which files reports pursuant to the Exchange Act, since 2017. Prior to joining Synchronoss, Mr. Lurie was employed by AT&T for 27 years. At AT&T, Mr. Lurie served in a variety of leadership roles, including as President and Chief Executive Officer of Mobility and Consumer Operations from 2016 to 2017, President and Chief Executive Officer of Emerging Enterprises and Partnerships from 2014 to 2016, President of Emerging Devices and National Distribution and Partnership from 2011 to 2014 and President of Emerging Devices from 2008 to 2011.

Specific Qualifications, Attributes, Skills and Experience:

EDUARDO G. MESTRE

Board Committees: Executive

Mr. Mestre, age 69, has been a director since July 2008. Mr. Mestre has been Senior Managing Director and Chairman of Global Advisory at Evercore Partners Inc., an independent investment banking advisory firm, since March 2017. Mr. Mestre joined Evercore Partners in 2004 as Vice Chairman, and became Senior Managing Director and Chairman of Global Advisory in February 2012. From April 2014 until March 2017, he was Senior Advisor of Global Advisory of Evercore Partners. Prior to joining Evercore, Mr. Mestre served as Chairman of Investment Banking at Citigroup, among numerous leadership positions he held during a 27-year career there. Mr. Mestre previously served on the board of Comcast Corporation, a company that files reports pursuant to the Exchange Act.

Specific Qualifications, Attributes, Skills and Experience:

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JAGDEEP PAHWA

Mr. Pahwa, age 44, has been the President of SRS Investment Management, LLC since 2017 and has led SRS’s private equity business since 2006. Previously, Mr. Pahwa worked at McKinsey & Company in the U.S. and India, where he led client engagements in the telecom, technology and real estate sectors. Prior thereto, Mr. Pahwa worked in the Mergers & Acquisitions group of Lehman Brothers in New York.

Specific Qualifications, Attributes, Skills and Experience:

F. ROBERT SALERNO

Board Committees: Audit, Executive

Mr. Salerno, age 66, has been a director since August 2006. Mr. Salerno was previously Vice Chairman of the Company from June 2010 through December 2011, and President and Chief Operating Officer of the Company from August 2006 to June 2010. For nearly 30 years, Mr. Salerno held numerous leadership positions with the Company, including as chief executive of Cendant’s vehicle rental business and as President and Chief Operating Officer of Avis from 1996 to November 2002. Mr. Salerno previously served on the board of Norwegian Cruise Line Holdings, Ltd., which files reports pursuant to the Exchange Act.

Specific Qualifications, Attributes, Skills and Experience:

FRANCIS J. SHAMMO

Mr. Shammo, age 57, was the Executive Vice President and Chief Financial Officer of Verizon Communications, Inc. from November 2010 until November 2016, and retired from Verizon at the end of 2016. After joining Bell Atlantic Corporation in 1989, which merged with GTE Corporation in 2000 to form Verizon, he held positions of increasing responsibility in finance, mergers and acquisitions, logistics, facilities, regional operations, and planning. His prior positions include President and Chief Executive Officer of Verizon Telecom and Business, Senior Vice President and Chief Financial Officer of Verizon Business, President—West Area of Verizon Wireless, and Vice President and Controller of Verizon Wireless. Since 2015, Mr. Shammo has been a director of Unum Group, which files reports pursuant to the Exchange Act.

Specific Qualifications, Attributes, Skills and Experience:

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CARL SPARKS

Mr. Sparks, age 50, was the Chief Executive Officer and a director of Academic Partnerships, an online service provider for higher education, from 2016 to 2017. From 2011 to 2014, Mr. Sparks was the Chief Executive Officer of Travelocity Global. Mr. Sparks was also employed by Gilt Groupe, serving as its Chief Marketing Officer in 2009 and its President from 2010 to 2011. Prior to joining Gilt Groupe, Mr. Sparks served in a variety of leadership roles at Expedia Inc. from 2004 to 2009, including as Senior Vice President, Marketing and Retail Operations at Hotels.com from 2004 to 2006, Chief Marketing Officer at Expedia.com from 2006 to 2007, and General Manager at Hotels.com USA, Latin America & Canada from 2008 to 2009. Earlier, Mr. Sparks served as Vice President of Direct Business and Brand at Capital One Financial Corp., and also served in senior marketing and strategy roles at Guinness & Co., PepsiCo Inc., and The Boston Consulting Group. Mr. Sparks has been a director of Dunkin’ Brands Group, Inc. since 2013, and was a director of Vonage Holdings Corp. from 2011 to 2018, both of which file reports pursuant to the Exchange Act. Mr. Sparks is also currently serving as a director of ActionIQ, Inc., an enterprise software company.

Specific Qualifications, Attributes, Skills and Experience:

SANOKE VISWANATHAN

Board Committees: None

Mr. Viswanathan, age 42, has been a director since March 2016. Mr. Viswanathan has been the Chief Administrative Officer of JPMorgan Chase & Co.’s Corporate & Investment Bank, overseeing technology, operations and controls since 2014. Previously, Mr. Viswanathan was head of strategy, marketing and new business development for the Corporate & Investment Bank from 2012 to 2013 and head of corporate strategy for JPMorgan Chase from 2010 to 2012. Prior to joining JPMorgan Chase, Mr. Viswanathan was a partner at McKinsey & Co. and co-head of its global corporate and investment banking practice, serving financial institutions in Asia, Europe and North America on strategy, organization and risk management topics. Mr. Viswanathan has been on the Board of Sadler’s Wells Theatre in London since 2014. Mr. Viswanathan was initially appointed to the Board pursuant to the terms of a cooperation agreement between the Company and SRS Investment Management, LLC and certain of its affiliates.

Specific Qualifications, Attributes, Skills and Experience:

Director Nomination Process

For additional information regarding the director nomination process, please see the section titled “Director Nomination Procedures” on page 30 of this Proxy Statement.

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If you have any questions or require assistance with voting your shares, please contact our proxy solicitor, Innisfree M&A Incorporated:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

Shareholders may call toll-free at (877) 687-1866

Banks and brokers may call collect at (212) 750-5833

THE BOARD OF DIRECTORS RECOMMENDS A VOTE ON THE WHITE PROXY CARD “FOR ALL” OF THE NOMINEES RECOMMENDED BY OUR BOARD

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Corporate Governance

Functions and Meetings of the Board of Directors

The Company’s corporate governance guidelines, director independence criteria, committee charters, codes of conduct and other documents setting forth the Company’s corporate governance practices can be accessed in the “Investor Relations-Corporate Governance” section of the Company’s website at www.avisbudgetgroup.com.

Director Independence

To determine director independence, our Board of Directors reviews commercial and charitable relationships of each director to evaluate such director’s independence in accordance with the listing standards of the NASDAQ Stock Market LLC (“NASDAQ”) and pursuant to our own director independence criteria, which can be accessed on our website at www.avisbudgetgroup.com. In conducting its review, the Board of Directors considers a number of factors, including the director’s and his or her family members’ relationships with the Company and its subsidiaries, affiliates, executive officers and auditors and his or her relationships with foundations, universities and other non-profit organizations to which the Company has made a certain level of contributions during the past three years. After evaluating the factors described above, the Board of Directors has affirmatively determined that ten of our current directors are independent in accordance with NASDAQ corporate governance listing standards and our own director independence criteria. The independent directors currently serving on our Board are Brian J. Choi, Mary C. Choksi, Leonard S. Coleman, Jeffrey H. Fox, John D. Hardy, Jr., Lynn Krominga, Eduardo G. Mestre, F. Robert Salerno, Stender E. Sweeney and Sanoke Viswanathan. In determining that Mr. Viswanathan is independent, the Board of Directors considered that he is employed by JPMorgan Chase & Co. (“JPM”) and that JPM and its affiliates provide various financial services to the Company and its subsidiaries for which they have received customary fees. However, the Board did not believe that the Company’s relationship with JPM impacted the independence of Mr. Viswanathan for the following reasons:

Independent Nominees

We also maintain a Corporate Governance Committee, a Compensation Committee and an Audit Committee, and all of the directors serving on these committees are independent based upon NASDAQ corporate governance listing standards and our own director independence criteria.

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Board Leadership Structure

Our current Board leadership structure consists of:

The Board of Directors, which is comprised of individuals who have extensive experience with board processes, has determined that the current leadership structure, as described above, best serves the Company and its shareholders.

The Board split the roles of Chief Executive Officer and Chairman when Mr. Nelson stepped down from the role of Chief Executive Officer at the end of 2015. However, the Board does not currently have a requirement that the roles of Chief Executive Officer and Chairman of the Board be separated, because the Board believes it is in the best interests of our Company to make this determination based on the position and direction of our Company and the constitution of the Board and management team from time to time.

The Board believes that the 2015 implementation of a carefully considered succession plan demonstrates that the Board takes seriously its responsibility to determine who should serve as Chairman at any point in time in light of the specific circumstances facing our Company. In September 2015, after careful consideration, the Board determined that having Mr. Nelson serve as Chairman was in the best interests of the Company and its shareholders and that Mr. Nelson’s knowledge of our Company’s operations and strategy provided a valuable resource to both the Board and Mr. De Shon, which has helped facilitate a smooth transition of the Chief Executive Officer role. Mr. Nelson has announced that he does not intend to stand for reelection at the Meeting, and is not a nominee for reelection at the Meeting.

The independent members of the Board have designated Mr. Coleman to serve in the position of Presiding Director. The position of Presiding Director was established by the Board to designate an independent lead director whose primary responsibilities include:

Such delegation of well-defined responsibilities to a lead independent director helps ensure that an appropriate independent leadership structure is in place.

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Mr. Coleman brings a history of leadership experience as a lead independent director. As our Presiding Director, Mr.  Coleman provides the Board with independent leadership and facilitates the independence of the Board from management.

Risk Management and Risk Assessment

Management is responsible for assessing risk and for day-to-day risk management activities. The Board executes its oversight responsibility for risk assessment and risk management, acting directly and through its Committees, as follows:

In 2018, consistent with past practice, management reviewed the Company’s compensation policies and practices for employees generally as they relate to risk management. As part of this process, management reviewed the Company’s incentive compensation programs applicable to all employees with the chairmen of the Audit and Compensation Committees and the compensation consultant engaged by the Compensation Committee to determine whether such programs create incentives that might motivate inappropriate or excessive risk-taking. In the course of such review, mitigating features of the Company’s incentive compensation programs were considered, including: (1) the Company’s recoupment policies; (2) that virtually all of the Company’s annual incentive programs allow for “downward discretion,” which permits the Company to reduce incentive compensation payouts; and (3) that executive officers are subject to share ownership and retention guidelines. As a result of this process, there were no recommended changes to the Company’s incentive compensation programs.

Communicating with the Board of Directors

Shareholders and other interested parties may send communications directly to the Board of Directors by writing to the Board of Directors, c/o the Corporate Secretary, Avis Budget Group, Inc., 6 Sylvan Way, Parsippany, N.J. 07054.

In addition, all parties interested in communicating directly with the Presiding Director or with any other independent director may do so by writing to Avis Budget Group, Inc. at the same address, Attention: Presiding Director, c/o the Corporate Secretary or via e-mail at presiding.director@avisbudget.com. The Presiding Director is responsible for reviewing and distributing all interested parties’

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communications received to the intended recipients and/or to the full Board of Directors, as appropriate.

Codes of Conduct

The Board of Directors has adopted a code of conduct that applies to all officers and employees, including the Company’s principal executive officer, principal financial officer and principal accounting officer. The Board of Directors has also adopted a code of business conduct and ethics for directors. Both codes of conduct are available in the “Investor Relations-Corporate Governance” section of the Company’s website at www.avisbudgetgroup.com. The purpose of these codes of conduct is to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; to promote full, fair, accurate, timely and understandable disclosure in periodic reports required to be filed by the Company; and to promote compliance with all applicable rules and regulations that apply to the Company and its officers and directors.

Board of Directors Meetings

The Board of Directors held six meetings during 2017. In 2017, all incumbent director nominees attended 100% of the meetings of the Board of Directors and committees of the Board of Directors on which they served during such director’s period of service. We expect all directors to attend each regularly scheduled Board of Directors meeting. All directors are welcome to attend the Company’s annual meeting of shareholders, and our goal is for a representative of each of the Audit Committee, Compensation Committee and Corporate Governance Committee to be present at each annual meeting. The 2017 annual meeting of shareholders was attended by five directors, including a representative of each of the Audit, Compensation and Corporate Governance Committees.

Committees of the Board of Directors

The standing committees of the Board include: the Audit Committee, the Compensation Committee, the Corporate Governance Committee and the Executive Committee.

The charters of each of the Audit, Compensation and Corporate Governance Committees, respectively, can be found in the “Investor Relations-Corporate Governance” section of the Company’s website at www.avisbudgetgroup.com.

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Audit Committee

The Audit Committee assists in the Board’s oversight of:

The Board of Directors has determined that all members of the Audit Committee are independent directors under the Company’s Director Independence Criteria and within the meaning of applicable NASDAQ rules, and that each member of the Audit Committee has the ability to read and understand fundamental financial statements. The Board of Directors has determined that each member of the Audit Committee qualifies as an “audit committee financial expert” as defined by the rules of the SEC, thereby satisfying NASDAQ’s “financial sophistication” requirement.

Compensation Committee

The primary responsibilities of the Compensation Committee include to:

We refer you to “Executive Compensation” below for additional information regarding the Compensation Committee’s processes and procedures.

The Board of Directors has determined that each member of the Compensation Committee is an independent director in accordance with NASDAQ listing standards and the Company’s Director Independence Criteria, an outside director for purposes of Section 162(m) of the Internal Revenue Code (the “Code”), and a non-employee director for purposes of Section 16 of the Exchange Act.

Corporate Governance Committee

General

The responsibilities of the Corporate Governance Committee include identifying and recommending to the Board of Directors appropriate director nominee candidates and providing oversight with respect to corporate governance matters. The Board of Directors has determined that each of the current members of the Corporate Governance Committee qualifies as an independent director under applicable NASDAQ rules and the Company’s Director Independence Criteria.

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Director Nomination Procedures

The Corporate Governance Committee considers the appropriate balance of experience, skills and characteristics required of members of the Board of Directors. Nominees for director positions are selected on the basis of their depth and breadth of experience, wisdom, integrity, ability to make independent analytical inquiries, understanding of the Company’s business environment, and willingness to devote adequate time to the duties associated with being a member of the Board of Directors.

The Corporate Governance Committee will consider written proposals from shareholders for candidates to be nominees for director positions. In considering candidates submitted by shareholders, the Corporate Governance Committee will take into consideration the needs of the Board of Directors and the qualifications of the candidate. Any such proposal should be submitted to the Corporate Governance Committee, c/o the Corporate Secretary of the Company, at Avis Budget Group, Inc., 6 Sylvan Way, Parsippany, N.J. 07054, and should include the following: (a) the name of the shareholder and evidence of such shareholder’s beneficial ownership of the shares of Common Stock, including the number of shares of Common Stock beneficially owned and the length of time of such beneficial ownership; and (b) the name of the candidate, such candidate’s resume or a listing of his or her qualifications to be a director of the Company and such candidate’s consent to be named as a director, if selected by the Corporate Governance Committee, nominated by the Board of Directors and elected. The written proposal should be submitted in the time frame and consistent with the requirements described in the by-laws of the Company and under the caption “Shareholder Proposals for 2019 Annual Meeting” below.

The Corporate Governance Committee’s process for identifying and evaluating candidates to be nominees to the Board of Directors is typically initiated by identifying a candidate who meets the criteria for selection as a nominee and has the specific qualities or skills being sought based on input from members of the Board of Directors and, if the Corporate Governance Committee deems appropriate, a third-party search firm which would help the Board to identify candidates. These candidates are evaluated by the Corporate Governance Committee by reviewing such candidates’ biographical information and qualifications and checking the candidates’ references. Certain qualified candidates are interviewed by at least one member of the Corporate Governance Committee. Using the input from this interview and other information, the Corporate Governance Committee evaluates whether the candidate is qualified to serve as a director and whether the Corporate Governance Committee should recommend to the Board of Directors that the Board nominate the candidate or elect the candidate to fill a vacancy on the Board of Directors. Candidates recommended by the Corporate Governance Committee are presented to the Board of Directors for selection as nominees to be presented for the approval of the shareholders or for election to fill a vacancy.

In general, the Corporate Governance Committee expects that a similar evaluation process would be used to evaluate candidates to be nominees for director positions recommended by shareholders.

In January 2018, the Company announced that, consistent with the Board’s commitment to maintaining a highly qualified, independent Board, a leading search firm was recently retained to assist in its ongoing process of identifying new director candidates with specific skill sets to replace directors who may retire in the near future. In March 2018, the Corporate Governance Committee recommended that four new directors be added to the Board: Messrs. Glenn Lurie, Jagdeep Pahwa, Francis J. Shammo and Carl Sparks.

Diversity

While the Board has not adopted a formal policy with respect to diversity, the Corporate Governance Committee believes it is important that nominees for the Board represent diverse viewpoints and backgrounds. The Corporate Governance Committee is committed to advancing Board diversity, defined to include differences of viewpoint, professional experience, education, skill, race, gender and

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national origin, and as specified in its charter, considers diversity in the mix of qualifications, experience, attributes or skills included in its process of identifying and evaluating candidates to be nominees to the Board. The Company believes that its nominees further its commitment to enhancing gender diversity at the Board level.

Executive Committee

The Executive Committee has and may exercise all of the powers of the Board of Directors when the Board of Directors is not in session, including the power to authorize the issuance of stock, except that the Executive Committee has no power to (a) alter, amend or repeal the by-laws or any resolution or resolutions of the Board of Directors, (b) declare any dividend or make any other distribution to the shareholders of the Company, (c) appoint any member of the Executive Committee, or (d) take any other action which legally may be taken only by the full Board of Directors.

Succession Planning

The Board of Directors is responsible for the development, implementation and periodic review of a succession plan for our Chief Executive Officer and each senior executive, all of whom have been designated as members of our Senior Leadership Team (“SLT”).

In September 2015, the Company announced the implementation of a succession plan (the “2015 Succession Plan”) and announced the Board’s selection of Mr. De Shon, the Company’s then-President International, to become the Company’s next Chief Executive officer, effective January 1, 2016.

In developing the 2015 Succession Plan, the Board of Directors established a list of critical attributes and implemented a formal assessment process employing an external advisor to assess and develop successor candidates. The Board of Directors also oversaw the development of internal candidates, talent development plans, and engaged in mentoring to strengthen the skills and qualifications of such candidates.

Our Board of Directors believes that effective succession planning and talent management and development play a critical role in safeguarding business capabilities, developing strong leadership quality and executive bench strength, and optimizing overall business development, operating performance, profitability and shareholder value.

The Board of Directors views succession planning as a continual process and intends to continue to engage in succession planning consistent with the process described above. In order to ensure that qualified candidates are available for the position of Chief Executive Officer and also for each senior executive position held by a SLT member, the Board of Directors oversees the development of internal candidates, maintains talent development plans to strengthen the skills and qualifications of such candidates and would be responsible, if necessary, for the identification of suitable external successor candidates.

The Board of Directors has also developed an “emergency” succession plan in the event of an unexpected disability or inability of our Chief Executive Officer or other senior executive to perform his or her duties.

Related Person Transactions

There are no related person transactions that require reporting under SEC rules. The Company has adopted written procedures for the review, approval or ratification of transactions with related persons that apply to any transaction, arrangement or relationship in which:

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Under the Company’s related persons policy, transactions with related persons are reviewed in advance by the General Counsel and Chief Compliance Officer and the Corporate Secretary of the Company, or in certain circumstances, as soon as possible thereafter. If it is determined by such officers that the transaction is a related person transaction and the amount involved exceeds $120,000:

The Audit Committee reviews on an annual basis contributions by the Company in excess of $1,000, in the aggregate (other than contributions made pursuant to the Company’s matching contribution program for employees and directors), to a charitable organization at which a related person is actively involved with fund-raising or serves as a director, trustee or in a similar capacity.

Shareholder Engagement

We regularly conduct engagement and outreach efforts in order to communicate with existing and prospective shareholders, lenders, research analysts, rating agencies, governance firms and others. In 2017, our key engagement activities included numerous group and one-on-one investor meetings, conference calls accessible to all shareholders following each of our quarterly earnings releases, presentations at various investor conferences, and our 2017 Annual Meeting of Shareholders. Numerous members of management, in addition to our Chief Executive Officer and Chief Financial Officer, participated in these activities, each of which contained opportunities for shareholders and other constituents to provide feedback to management.

From time to time, certain of our independent Board members attend investor meetings, in addition to attending the Annual Meeting of Shareholders. For example, in 2016 and in prior years, certain of our independent Board members attended our investor day, which is typically held bi-annually, as well as one-on-one investor meetings.

Our investor relations department is the key point of contact for shareholder interaction with the Company. Shareholders and other interested parties may access investor information about our Company through our website at www.avisbudgetgroup.com. The investor relations department coordinates institutional investor meetings with management, appearances at investor conferences and our quarterly earnings calls. We consider shareholder requests to meet with members of our Board of Directors on a case-by-case basis.

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Security Ownership of Certain Beneficial Owners

The following table sets forth information regarding beneficial ownership of shares of Common Stock as of March 14, 2018, by (i) each person who is known by us to beneficially own more than 5% of the outstanding shares of Common Stock, (ii) each of the Company’s directors and each of its named executive officers (“NEOs”), and (iii) all of the Company’s directors, nominees and current executive officers, as a group.

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Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company’s executive officers and directors, and persons who beneficially own more than ten percent of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the SEC. As a practical matter, the Company typically assists its directors and executive officers by monitoring transactions and completing and filing Section 16 reports on their behalf. The Company believes that all filings required to be made under Section 16(a) of the Exchange Act during 2017 were timely made.

Executive Officers

The present executive officers of the Company are set forth in the table below. All executive officers are appointed at the annual meeting or interim meetings of the Board of Directors. Each executive officer is appointed by the Board of Directors to hold office at the discretion of the Board of Directors and may be removed at any time by the Board of Directors with or without cause.

Biographical information for our Executive Chairman and our Chief Executive Officer is set forth above under “Board of Directors-Biographical Information for Nominees.” Biographical information for all other present executive officers is set forth below.

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Executive Compensation

Compensation Discussion and Analysis

We refer you to our Annual Report on Form 10-K for the year ended December 31, 2017 (our “2017 Form 10-K”) for additional information regarding our financial results discussed below. In this Proxy Statement, we refer to Adjusted EBITDA, which we define as income from continuing operations before non-vehicle related depreciation and amortization, any impairment charges, restructuring and other related charges, early extinguishment of debt costs, non-vehicle related interest, transaction-related costs, net charges for unprecedented personal-injury legal matters and income taxes. This non-GAAP measure is a performance metric in our incentive programs and a reconciliation is provided under “Analysis of 2017 Pay Decisions.” When we refer to “the Committee” in this “Executive Compensation” section, we are referring to the Compensation Committee.

Executive Summary

2017 Company Performance

For 2017, our revenue increased by 2% compared to 2016 revenue, growing to $8.8 billion, our net income was $361 million, and our Adjusted EBITDA was $735 million. Our Adjusted EBITDA was below the 2017 business plan goal that we had set and was 12% lower than 2016 Adjusted EBITDA. This was primarily due to higher per-unit fleet costs and lower pricing, particularly in the first half of the year. Management partially offset these challenging industry headwinds through cost-reduction actions and strategic initiatives in the areas of profitable revenue growth, fleet optimization and operational efficiencies.

In 2017, we made investments in our business designed to lower our cost structure, modernize our core infrastructure and further our position in the evolving mobility landscape. We also returned capital to our shareholders through the repurchase of $200 million of our Common Stock, resulting in the repurchase of 6.1 million shares. Our stock price increased by 19.6% from December 31, 2016 to December 31, 2017.

In 2018, consistent with our strategy, we intend to continue to apply our brands, technology and people to drive profitable growth, while further building our position in the wide mobility services industry by continuing to: invest in connected car technology; roll-out our Demand-Fleet-Pricing system; enhance our mobile app, including targeting ease of use and speed; execute on our fleet optimization, workforce planning and shuttling initiatives; and explore new mobility partnerships and products.

2017 Strategic Accomplishments

In 2017, the Company continued to execute on its strategy designed for an evolving landscape through:

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2017 Compensation for our Named Executive Officers

Alignment of 2017 Compensation with Performance

Our history of pay for performance alignment was evident in the compensation paid to our named executive officers for 2017. While management’s leadership and actions partially offset industry headwinds, as described above, based on actual 2017 financial performance, performance-based long-term incentives, which were granted in 2015 and based primarily on three-year cumulative Adjusted EBITDA goals, did not vest in 2018 and were forfeited without any payout. Our named executive officers also received no payouts under the 2017 annual incentive program (based on Adjusted EBITDA goal attainment for both Global and the Americas region), and performance-based long-term incentive awards granted in 2016 and 2017 and scheduled to vest in 2019 and 2020, respectively, are currently not expected to vest.

The table below evidences our strong pay for performance approach, which has yielded target or above-target payouts in strong performance periods and below-target payouts in periods where target goals were not achieved, and sets forth historical payouts under our regular global performance-based incentive programs, in which our current CEO and Regional Presidents participated.

Setting 2017 Pay Levels

In connection with the one-year anniversary of our CEO’s tenure, the Committee, with input from its compensation consultant, conducted a full review of our CEO’s compensation opportunity to determine the appropriate 2017 pay package. Based on the results of that review, and the Compensation Committee’s ongoing evaluation of appropriate compensation-setting practices, the Committee determined increases were appropriate. Driven in part by a full market review of pay opportunity, our Chief Executive Officer’s base salary was increased by 10% and his target long-term incentive opportunity, which is 60% performance-based, was increased by $2.5 million. As part of the regular annual review, in which both market and other factors are considered, the salaries of our President, Americas and President, International increased by approximately 4%, and the long-term incentive opportunities for these executive officers, which are 50% performance-based, increased by $200,000.

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Setting 2017 Performance Metrics

The Committee conducted an in-depth review of the Company’s annual and long-term incentive programs to evaluate the efficacy of the existing performance metrics. Driven in large part by the Company’s updated strategic goals, which include a significant focus on margin improvement, the Committee determined to change the performance metric for the 2017 long term incentive program to strengthen the alignment of long-term incentives with the Company’s business objectives. As a result, the Committee set goals for the 2017 long term incentive program that were based strictly upon Adjusted EBITDA margin improvement instead of an absolute target. The Committee also determined that the modifier to potentially increase payouts was no longer warranted. Finally, the Committee did not believe any change was necessary for the 2017 annual incentive program, which was based on Adjusted EBITDA absolute targets, consistent with prior years.

CFO Compensation

Our former Chief Financial Officer separated from the Company in 2017, and, as a result, he received severance payments consistent with his employment agreement plus an additional cash payment of $1.25 million. The additional cash payment was made in recognition of an amendment to our former Chief Financial Officer’s employment agreement in 2016, which significantly reduced the amount of severance payable in a separation. The additional cash payment was substantially less than the additional severance that would have been payable had the separation occurred prior to the employment agreement amendment. The compensation we paid in 2017 to our interim Chief Financial Officer reflects his assignment when he assumed the role, a pro-rated annual base salary of $575,000 and an annual incentive target, as a percentage of base salary, of 80%. However, as discussed above, no amounts were paid to our interim Chief Financial Officer under the annual incentive program.

Special Incentives

In September 2017, the Compensation Committee sought to recognize certain named executive officers for their leadership in addressing challenges the Company’s business faced from industry headwinds in both 2016 and 2017, which were out of management’s control and greatly contributed to below-target annual incentive payouts in 2015 and 2016, below-target or no payouts under the 2017 annual incentive program, and that performance-based long-term incentives were not expected to vest in 2018-2020. Accordingly, the Committee awarded special one-time long-term incentives to two key business leaders, our President, Americas and our President, International, with grant date values of $1.7 million, and $650,000, respectively. The values of these special awards were significantly less than the target amounts of the incentives that were not, or were not expected to be, paid to these executives. The awards were also intended to acknowledge the importance of retaining experienced management in a highly competitive, cyclical and fast evolving industry.

Compensation Practices

We believe that our compensation programs reflect sound practices, such as:

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Our Named Executive Officers

This discussion addresses executive compensation in 2017 for our named executive officers, who are:

Mr. Ferraro and Mr. Servodidio are sometimes referred to herein collectively as the “Regional Presidents,” and our CEO, our interim CFO, our Chairman and the Regional Presidents are sometimes referred to herein collectively as our “Current Named Executive Officers.”

Philosophy, Components and Mix of Executive Compensation

In 2017, “pay for performance” continued to be a fundamental tenet of our compensation philosophy, which includes the core principles of rewarding the attainment of appropriately challenging performance goals and aligning our executives’ objectives with our shareholders’ interests. The Committee also believes that executive compensation should be designed to attract and retain a high-caliber leadership team and take into consideration competitive practices and the overall market for executive talent.

Compensation for our NEOs is typically comprised of the following components:

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Analysis of 2017 Pay Decisions

Compensation for our CEO

In connection with the one-year anniversary of our CEO’s tenure, the Committee, with input from its compensation consultant, conducted a full review of our CEO’s compensation opportunity to determine the appropriate 2017 pay package. This review included, among other things, an assessment of our CEO’s performance in 2016 and consideration of market compensation data (as described in “Consideration of Peer Groups and Survey Data”). In connection with its performance review, the Committee considered that:

As a result of this review, the Committee determined that our CEO’s compensation was below the market median of similarly situated executives and an increase was warranted. As a result, the Committee approved the following elements of pay for our CEO for 2017:

The Committee determined that a long-term incentive award comprised of a mix of predominantly performance-based restricted stock units (“PSUs”) was appropriate, considering our pay-for-performance philosophy and past practice. The PSU award is further described under “2017 Long-Term Incentive Awards.”

Consistent with our past practice, more than 50% of our CEO’s 2017 pay opportunity, at target, was performance-based, excluding all other compensation.

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Compensation for our Chairman

In December 2016, our Chairman’s employment agreement was extended through December 31, 2017. Accordingly, the Committee elected not to make any changes to our Chairman’s pay opportunity for 2017 compared to 2016. Given the changes to our Long-Term Incentive Program as further discussed under “2017 Long-Term Incentive Awards,” the Committee approved an annual performance-based cash incentive in lieu of PSUs, as described under “Annual Incentive Awards.” Accordingly, our Chairman’s 2017 compensation consisted of:

Actual 2017 compensation for our Chairman reflected a reduction of more than 30% compared to 2016 compensation. Our Chairman has announced that he does not intend to stand for reelection at the 2018 Annual Meeting of Shareholders.

Base Salaries for our other Named Executive Officers

Salaries for our NEOs are typically determined based on factors such as our past practice, reasonable comparability with Peer Group pay data and Survey Data (as described under “Consideration of Peer Groups and Survey Data”) and each NEO’s responsibilities, capabilities and skills, commitment to our business, leadership and drive to add value. For the CEO and CFO roles, the Committee also considers the size and complexity of our balance sheet and capital structure.

In the beginning of 2017, the Committee approved salary increases of approximately 4% for each of our Regional Presidents. These increases were determined following an annual review for each role. The Committee also determined to maintain the base salary for our Former CFO, with no change compared to 2016.

In June 2017, the Committee approved a base salary for our interim CFO following a review of market data and the other factors described above.

Annual Incentive Awards

In establishing the 2017 annual performance-based incentive program, the Committee determined that the design should remain consistent with past practice, with target payouts as a percentage of base salary consistent with 2016 levels. The Committee also approved a target annual incentive opportunity of 80% of base salary for our interim CFO in connection with his appointment to the role in 2017. Payout opportunities also remained consistent with 2016 levels, ranging from 25% to 200% of target.

Consistent with past practice, the performance metric for our 2017 annual incentive program was Adjusted EBITDA, which is a key measure of operational and financial performance and is driven by achieving profitable revenues and our strategic plan, and widely understood within the Company. While the Committee considered whether additional or different performance metrics should be utilized for the Company’s 2017 annual incentive program, the Committee determined that the metrics should remain consistent in light of the Committee’s decision to change the performance metric for the 2017 Long-Term Incentive Program, as further discussed below.

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The performance goals, presented below, were set based on the Company’s 2017 business plan. At target, the global goal represented an increase of approximately 6%, compared to 2016 Adjusted EBITDA, as reported.

Global achievement under the 2017 annual incentive program was below threshold. This resulted from the Company’s attainment of Adjusted EBITDA of $735 million. Accordingly, actual payouts as a percentage of target for NEOs were as follows:

A reconciliation of our reported global net income to our reported global Adjusted EBITDA is set forth below (dollars are in millions):

We believe Adjusted EBITDA is useful as a supplemental measure in evaluating the aggregate performance of our operating businesses and in comparing our results from period to period. We believe Adjusted EBITDA is useful to investors because it allows investors to assess our financial condition and results of operations on the same basis that management uses internally. Adjusted EBITDA is a non-GAAP measure and should not be considered in isolation or as a substitute for net income or other income statement data prepared in accordance with U.S. GAAP. Our presentation of Adjusted EBITDA may not be comparable to similarly titled measures used by other companies.

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2017 Long-Term Incentive Awards

Regular Long-Term Incentive Program for 2017

Grant date values for awards under the Company’s 2017 regular Long-Term Incentive Program (the “2017 LTIP”) were as described above for our CEO and our Chairman, and following its annual executive compensation review, the Committee increased the value of the 2017 LTIP awards granted to our Regional Presidents by $200,000. No long-term equity award was granted to our interim CFO due to the interim nature of his appointment.

The following factors were reviewed to determine the appropriate type of equity to be granted: perceived value to award recipients to effect retention and incentive goals, peer practices, the degree of alignment with shareholder interests, potential dilution and projected expense balanced with the value delivered to award recipients. Based on an analysis of these factors, the Committee determined that (a) for our CEO and our former CFO, a mix of 60% PSUs and 40% time-based restricted stock units (“RSUs”) and (b) for our Regional Presidents, an equal mix, at target, of PSUs and RSUs, would:

As discussed above, the 2017 LTIP award for our Chairman was time-based and reflected a 50% decrease in value compared to the 2016 award, which was comprised of 50% RSUs and 50% PSUs. This reduction in value was offset by our Chairman’s participation in the 2017 annual incentive program, which is 100% performance-based and under which our Chairman received no payout.

During 2016, the Committee undertook a full review of the performance metrics included in the Company’s annual and long-term incentive programs, which included one-year Adjusted EBITDA goals and three-year cumulative Adjusted EBITDA goals with a relative total shareholder return modifier, respectively. Following such review, the Committee determined that in light of the Company’s updated strategic goals, which included a significant focus on margin improvement, that Adjusted EBITDA margin, defined as Adjusted EBITDA divided by Revenue, would be the appropriate performance metric for the 2017 LTIP, with a three-year performance period.

Maximum vesting was increased to 200% of target, from 150% under the 2016 long-term incentive program, to align to general market practices and the Company’s annual incentive program, and to recognize the challenging nature of the performance goals included in the 2017 LTIP, which were expected to have a higher degree of difficulty to achieve than the three-year cumulative Adjusted EBITDA goals included in prior long-term incentive awards.

The target goal represents a 50 basis-point improvement in 2016 Adjusted EBITDA margin, of 9.66%, for each year included in the performance period or a 150 basis-point improvement at the end of the performance period. In the first two years of the performance period, a “lock-in” feature provides an opportunity to satisfy a portion of the performance goals for up to one-third of the target units of the total award, with the entire award remaining generally subject to continued service through the scheduled vesting date in 2020. The lock-in feature was provided to recognize the challenging nature of the performance goals, as discussed above, and that pressures can significantly impact margin fluctuation, including changes in the used car market, which can be outside of management’s control.

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Adjusted EBITDA margin improvement goals for the 2017 LTIP are as follows:

Adjusted EBITDA margin for 2017 was below the threshold lock-in achievement level. Accordingly, no lock-in vesting has been achieved. Given the amount by which the Company’s 2017 Adjusted EBITDA margin was below 2017 threshold achievement level, the Company believes these awards are unlikely to vest.

Special Incentives — Philosophy and Rationale

The Committee believes that special one-time equity awards should be used sparingly outside of situations involving promotions and/or new hires, and only where individual performance and other circumstances warrant. In September 2017, each of our Regional Presidents was awarded a special, one-time RSU award, scheduled to vest 50% on the first and second anniversaries of the date of grant, subject to continued service through each scheduled vesting date. Grant date values for these awards were $1.7 million for our President, Americas, and $650,000 for our President, International. These awards were designed to recognize that in 2016 and 2017 management, including our Regional Presidents, successfully offset, in part, challenging industry headwinds with both cost reduction and strategic initiatives, and to recognize the importance of maintaining experienced management in a highly competitive and cyclical industry. Both of our Regional Presidents have long tenure with the Company and were involved in navigating the Company through the significant downturn we experienced in 2008-2009 as a result of the global economic crisis, and were instrumental in the Company’s 2017 achievements in workforce planning and shuttling, fleet optimization, driving additional direct bookings and prepaid rentals, and the continued roll-out of the Demand-Fleet-Pricing system. In approving these awards, the Committee considered the Company’s performance for 2017, which included improving results in the second half of 2017, and the retention value of prior incentive awards given both past and expected payouts under such awards. The Committee took into consideration below-target payouts under the 2015 and 2016 annual incentive programs, that the 2015 PSU awards were not expected to vest in 2017, and that it was unlikely that there would be any payouts under the 2016-2017 PSU awards or the 2017 annual incentive program (other than with respect to a below-target payout for the International region). However, the values of these special one-time awards were significantly less than the target award levels that were, or were expected to be, unearned.

Setting CEO and Other NEO Compensation

Our Board has assigned to the Committee the responsibility to approve compensation for all NEOs, including our CEO. The roles and duties of participants in the decision-making process for our executive program and their duties are summarized below.

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Role of the Independent Compensation Consultant

Consistent with its charter, the Committee continued its engagement of Pay Governance LLC, a compensation consulting firm, to work with the Committee and the Company as an adviser on executive compensation matters in 2017. The compensation consultant reports to, and is directed by, the Committee, which has the authority to retain or terminate compensation advisers. In early 2017, the Committee reviewed information regarding the independence and potential conflicts of interest of Pay Governance, taking into account, among other things, the factors set forth in the NASDAQ listing standards.

Based on this review, the Committee concluded that the engagement of Pay Governance did not raise any conflict of interest. Outside of services provided for the Committee and advice to the Corporate Governance Committee related to compensation of non-employee directors, the compensation consultant did not provide additional services to the Company in 2017.

Compensation Decisions

In the case of NEOs other than the CEO, our Human Resources staff develops recommendations as to the level of compensation for each pay component generally based on position scope (defined as the executive’s relative responsibilities compared to others within the Company and the individual’s potential impact on Company operations), and the individual’s experience level and performance in addition to the factors discussed under “Analysis of 2017 Pay Decisions” above. Performance criteria and goals are recommended by our Human Resources staff based on the Company’s business plan and goals, with input from the CFO and his staff. Recommendations related to the elements generally reflect a review of practices of our Peer Group and Survey Data (as defined below), and are typically designed to take into consideration past practice and our strategy to tie a greater portion of total target compensation to variable versus fixed compensation.

Each recommendation is then discussed with our CEO for feedback and final approval. Final recommendations are reviewed with the compensation consultant and the Chairman of the Committee to ensure that they are consistent with the Committee’s expectations and the Company’s compensation philosophy, and ultimately submitted to the Committee for consideration. The Committee has the ultimate right and authority to revise and/or approve recommendations of management.

Our CEO’s compensation is determined by the Committee, working directly with the compensation consultant. The Committee determines each component of our CEO’s compensation, taking into consideration our CEO’s performance as well as market and Peer Group data and other factors such as level of experience and responsibilities, leadership, skill, contributions to the Company and the size and complexity of the Company’s balance sheet and operations.

Risk Assessment

In approving annual and long-term incentive awards for our NEOs, the Committee assesses the risks associated with the adoption of these awards, including the performance measures and goals for the awards, and for 2016, concluded that the incentive awards approved would not be likely to encourage excessive risk-taking. Consistent with past practice, management also reviewed the Company’s compensation policies and practices for employees generally with the chairmen of the Audit and Compensation committees and the Company’s compensation consultant to determine whether these programs create incentives that might motivate inappropriate or excessive risk-taking. For additional information, please see “Functions and Meetings of the Board of Directors-Risk Management and Risk Assessment.”

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Consideration of Peer Groups and Survey Data

Given that there is just one other U.S.-based publicly traded car rental company, peer companies are selected to supplement that company with additional companies from industry sectors that are viewed as most relevant to our business based on the following criteria: company size based on revenue as the primary factor, headcount, market capitalization, enterprise value, and debt and assets. Given our capital structure, we place a greater emphasis on enterprise value than market capitalization when developing the peer group. For 2017 pay decisions, the Company’s peer group consisted of the following 16 companies (the “Peer Group”):

The current Peer Group was initially approved in 2011 and reviewed in subsequent years. For 2017, the Committee removed Starwood Hotels & Resorts Worldwide from the Peer Group as a result of its merger with Marriott International. The Committee reviewed pay data of the Peer Group, as previously discussed, applying regression analysis as needed that adjusts for the differences in revenue size within the Peer Group to ensure reasonable comparability of the pay packages of our NEOs. The Committee does not specifically target any percentile within the Peer Group when setting overall compensation, any individual element of compensation or the relative pay mix among different elements of compensation. The Committee expects to review the Peer Group from time to time in order to ensure that the component companies continue to meet the criteria for which they were selected, as well as to identify other companies that may become appropriate for inclusion.

The Committee recognizes that our executives have opportunities available to them in a range of industries and that any peer group for the Company will have some inherent limitations given the absence of a large sample of public companies in the vehicle rental business. In order to compare ourselves to a broad set of general industry market data available, the Committee also reviews widely-used survey data from consulting firms such as Aon Hewitt and Willis Towers Watson for companies that have revenue comparable to ours (the “Survey Data”) as another data point. The Survey Data¹ represents data from over 1,000 companies sized according to revenue, assets and number of employees.

In 2017, the Committee considered the Survey Data for each element of the 2017 compensation and benefits package as a general check and to ensure reasonable comparability. Consideration of the Peer Group and the Survey Data represented just two factors considered in setting executive compensation for 2017. Please refer to “Analysis of 2017 Pay Decisions” for the other factors considered in setting executive compensation for 2017.

Committee Consideration of the Company’s 2017 Shareholder Vote on Executive Compensation

The Committee reviewed the results of the Company’s shareholder advisory vote on executive compensation (“Say on Pay”) in 2017. At the 2017 annual meeting of shareholders, over 99% of the

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votes cast were in support of the Company’s Say on Pay proposal. Based on the 2017 Say on Pay results and feedback from shareholders, the Committee concluded that the Company’s overall compensation program as it relates to its NEOs enjoys the support of the Company’s shareholders and does not require revision to address any broad shareholder concerns.

Policy Related to Equity Awards

Our practice has been to grant long-term incentive awards at pre-established meetings of the Committee. Annual long-term incentive awards, which typically include the awards granted to all of the NEOs, have usually been approved on the date of the first regularly scheduled Committee meeting each year. However, the Committee retains the ability to determine, and has in the past determined, that another grant date may be appropriate in certain circumstances. For 2017 and future years, the Company granted, and expects to grant, awards at a subsequent meeting in March. Awards may also be approved at other Committee meetings typically for executives hired or promoted since the prior meeting. In connection with valuing the grants of stock-based awards, it is our policy generally to use, as the grant or strike price for any stock-based compensation vehicle, the closing price of our Common Stock on the date the Committee approves the award. The Committee typically approves a dollar amount for each restricted unit award, which is then divided by the closing price of our Common Stock on the date of grant to arrive at the number of restricted units to be granted.

Executive Stock Ownership and Retention Guidelines

Our executive stock ownership guidelines require senior officers to acquire and hold designated levels of Avis Budget Common Stock. Under these guidelines, our CEO is required to retain 100%, and other NEOs are required to retain a minimum of 50% of the net shares (net of taxes) obtained upon the vesting of restricted stock awards and of vested stock options, until reaching the following specified ownership thresholds:

Given the mandatory hold provision until thresholds are obtained, there is no specified deadline for achieving designated thresholds. For purposes of the executive stock ownership guidelines, stock ownership is defined to include stock owned by the executive directly, stock owned indirectly through the Company’s savings plan, and the “in-the-money” portion of vested stock options. Our current NEOs have exceeded the applicable specified ownership threshold, with the exception of our interim CFO.

Following attainment of ownership thresholds, our NEOs are required, for a period of one year, to hold an amount equal to 50% of the net shares obtained upon the vesting of any equity award and 50% of all stock options that vest.

Employment and Change of Control Agreements; Severance Arrangements

To foster the retention of our key management team and in accordance with past practice, we entered into an employment agreement with our CEO in connection with his assumption of the role in 2016. Effective December 31, 2017, the employment agreement with our Chairman expired and was not extended or renewed and his employment continues “at will.”

In June 2017, our Former CFO, who had held the role of chief financial officer since 2006, separated from the Company. In connection with this separation, we entered into a separation agreement which provided for post-separation severance and benefits in accordance with the terms of our Former CFO’s employment agreement, which was amended March 2016 to (i) reduce the cash severance payable in connection with a separation without cause or as a result of a constructive discharge from 299% to 200% of the sum of base salary plus target bonus, and to (ii) reduce accelerated vesting of

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stock-based awards from 100% of all awards to vesting of only those awards scheduled to vest less than two years following separation, with vesting of performance-based awards to be based solely on the actual achievement of the applicable performance goals. In consideration of these recent changes, the Committee approved an additional cash severance payment of $1.25 million, which was meaningfully less than the reduction in severance that was agreed to in 2016. The Separation Agreement also provided for non-competition, non-solicit and cooperation covenants.

We have also entered into agreements with our President, Americas and our President, International, under which the Company seeks to provide these officers with appropriate protections consistent with prevailing market practices. In addition, we entered into an agreement with our interim CFO in 2017 setting forth the terms of an anticipated short-term assignment.

A more detailed description of the Company’s current agreements with our NEOs is set forth below under the heading “Employment Agreements and Other Arrangements,” and the benefits that would be received by our NEOs in the event of termination without cause or a change in control are set forth below under the heading “Termination, Severance and Change of Control Arrangements.”

Perquisites and Benefits

We seek to provide perquisites to our executives that are consistent with those provided by Peer Group companies. Our perquisites currently consist primarily of financial planning services, auto use or allowance, discounted auto insurance, auto leasing through the employee lease program and limited personal use of Company-leased aircraft services. In 2017, Mr. Servodidio, who was based in the United Kingdom, and Mr. De Shon, who was based in the United Kingdom from October 2011 through October 2015, were also provided with expatriate benefits associated with a Company-requested long-term assignment to the United Kingdom. The Company does not provide tax reimbursements on perquisites for any of our NEOs other than relocation and expatriate benefits in accordance with the Company’s standard policies.

The Company pays annual dues for a membership in a private, not-for-profit dining club for use by our CEO primarily for Company-sponsored meetings. Employees, including our NEOs, may also receive tickets for professional baseball games held at Yankee Stadium, which are part of the Company’s season ticket subscription, and do not result in an associated incremental cost to our Company. Our ticket allocation policy is generally seniority-based, with a valid business purpose superseding any personal use. We will continue to review our compensation and benefit programs to ensure that we remain competitive with comparable companies and are able to attract and retain highly qualified senior executives.

Anti-Hedging Policy

The Company’s insider trading policy prohibits executive officers and directors from, among other things, (i) engaging in hedging transactions with respect to Company securities, including through the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds, and (ii) holding Company securities in a margin account or otherwise pledging Company securities as collateral for a loan. Short sales of the Company’s securities are also prohibited under such policy.

Recoupment (Clawback) Policy

Our Board of Directors has adopted a policy that provides that if the Board learns of any intentional misconduct by an “executive officer” (as defined under Section 16 of the Exchange Act) that resulted in an increase to incentive income awarded to that officer, the Board will, to the full extent permitted by applicable law, in all appropriate cases, require reimbursement of the increased portion of incentive income awarded to that officer. We intend to amend our clawback policy, if necessary, to comply with any rules adopted by the SEC.

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Deductibility of Compensation

Section 162(m) of the Code limits our ability to deduct certain compensation in excess of $1.0 million per year paid to the Company’s chief executive officer and to certain of our other named executive officers (the “covered NEOs”). Prior to the passage of the Tax Cuts and Jobs Act of 2017, this limitation did not apply to compensation that qualifies under applicable regulations as “performance-based.” For 2017 and prior years, it has been our intent to design the performance-based compensation we awarded to our NEOs to satisfy the requirements for deductibility under Section 162(m); however, the Committee is authorized to exercise discretion in determining payments in relation to levels of achievement of performance goals and believes that the total compensation program for executive officers should be managed in accordance with the objectives outlined in our compensation philosophy and in the best overall interests of our shareholders. For this reason, some compensation intended to be performance-based may exceed the limitations or not meet the requirements for deductibility under Section 162(m).

Compensation Committee Report

The Avis Budget Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

THE COMPENSATION COMMITTEE

John D. Hardy, Jr., Chairman

Brian J. Choi

Leonard S. Coleman

Jeffrey H. Fox

Lynn Krominga

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Summary Compensation Table

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All Other Compensation Table

*Reflects a £/$ exchange rate as of the date paid, received or allocated.

**For Mr. De Shon and Mr. Servodidio, amount include allowances for home leave, utilities, and a goods and services differential to make up for the difference in prices between the home and host locations. For Mr. Servodidio, amounts also include reasonable car rental costs for his accompanying spouse while on assignment. For 2016, amounts for Mr. De Shon relate solely to return moving and shipment services in connection with the end of his assignment to the United Kingdom. For Mr. Smith, amount includes reimbursements for home leave to the United Kingdom.

***For Mr. Smith, amounts include destination services related to his relocation from the United Kingdom to the United States.

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Perquisites Table

CEO Pay Ratio

For 2017, the Company reviewed a comparison of CEO pay to the pay of all its employees in 2017. The review included all employees employed by the Company as of October 1, 2017 and excluded 517, 293, 92, 8 and 609 of non-U.S. based employees in India, Brazil, Argentina, Monaco and China, respectively. We identified our median employee by (i) examining payroll records of each employee as previously described, whether employed on a full-time, part-time, seasonal or temporary basis, to

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calculate each employee’s gross earnings for a twelve-month period starting October 1, 2016 through September 30, 2017; (ii) ranking, by total amount of gross earnings, all employees except for our CEO from highest to lowest, resulting in a list of 29,083 employees; and (iii) selecting the employee ranked 14,542 on the list (the “Median Employee”). After identifying our Median Employee, we calculated total annual compensation for such employee, using the same methodology used for our named executive officers as set forth in the Summary Compensation Table above.

Total compensation for 2017 for our CEO was $6,934,077. Our Median Employee’s total compensation for 2017 was $28,831. The ratio of our CEO’s pay to the pay of our Median Employee for 2017 is 241 to 1.

Grants of Plan-Based Awards Table