Hertz interim CEO could get a big paycheck

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A Hertz office in New York.

Cindy Ord / Getty Images

Hertz Global Holdings

Interim CEO Mark Fields is expected to earn $ 13 million to run the company for a likely period of less than six months, according to a regulatory filing.

The company agreed to grant Fields, a former CEO of

Ford engine

some 500,000 restricted stock units are now worth more than $ 13 million, with Hertz shares (ticker HTZZ) ending Monday at $ 26.75, up 50 cents from the session. Hertz will also pay Fields a salary of $ 62,500 per week, or approximately $ 250,000 per month.

Fields was named interim CEO on October 5, and his compensation was disclosed in an 8-k form, a regulatory brief for unanticipated company changes.

The actual payout for the fields will be determined based on the share price when the shares vest. Fields will get half of the 500,000 share award if 90 days or less remain and the shares will vest on his employment termination date. If he occupies the position of interim CEO for more than 90 days, he obtains the full grant which will be acquired no earlier than the sixth month anniversary of his employment start date or at the end of his employment.

“The parties anticipate that the duration of your appointment as interim CEO will not exceed six (6) months, unless extended by mutual written consent,” Hertz said in the letter setting out his contract. of work.

One of Fields’ most important jobs will be leading Hertz in what he calls a “re-IPO,” which will involve listing the stock on a major stock exchange, conducting an investor tour and possibly the offer of shares. Such an offer could include newly issued shares and shares of existing holders. Hertz shares are now traded on the Pink Sheets.

“Mark’s compensation is directly tied to the long-term shareholder value of the company. As Hertz succeeds, everyone associated with the business will be successful. It also reflects the board’s goal of attracting a world-class leader to step in at this critical time as we create a whole new Hertz, ”the company told Barron’s.

Hertz emerged from bankruptcy on June 30 and its shares have surged recently, rising almost 40% since October 1, including a gain of almost 10% on October 5, when investors applauded the company’s decision. to appoint Fields as interim CEO. Former CEO Paul Stone remains president and chief operating officer.

The car rental industry is booming as prices are high and prices for used cars are high, which benefits Hertz when it sells vehicles from its fleet. Investors now expect the vehicle shortage that has led to high prices for rental cars to persist through 2022, with auto chips likely remaining in short supply.

Budget Opinion Group

(CAR) stocks have been in tears of late, gaining more than 50% since September 15. The stock hit another record high on Monday, rising 3% to $ 142.43 and valuing the company at $ 9.4 billion.

“What was a dysfunctional oligopoly with no pricing power is now a functional oligopoly with pricing power,” Hamzah Mazari, analyst at Jefferies with a buy rating on Avis, recently told Barron’s. Hertz, Avis and private enterprise dominate the US market.

The roadshow and reinvestment will present the history of Hertz investing for the first time since the company emerged from bankruptcy. The company did not receive an investor call after its second quarter earnings report in August.

In Fields, Hertz will have a well-known CEO with automotive background to tell the Hertz story to investors. Fields joined Hertz’s board of directors after it emerged from bankruptcy.

In appointing Fields, Hertz said he will “bring his experience as CEO of a public company as he leads Hertz’s interactions with the investment community.” In a statement, Fields said, “The world is going to be hearing a lot about Hertz in the weeks and months to come.”

The company has a strong balance sheet, ending the second quarter with net cash of $ 300 million outside of asset-backed securities backed by the company’s vehicle fleet. The company generated $ 639 million in earnings before interest, taxes, depreciation and amortization, or EBITDA, in the second quarter, a quarterly record. The third quarter was also probably strong.

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