Hertz pays $16 million in retention bonuses to 340 execs

Sandwiched between the layoff of thousands of employees and its bankruptcy declaration, Hertz rental car agency sneaked in millions of dollars in bonuses to top executives.

They’re known as retention bonuses, designed to keep top executives from leaving during upheaval, as CNN explained of the payments, which the rental-car company revealed in a U.S. Securities and Exchange Commission filing.

However, coming right after Hertz laid off half its workforce in late April, and right before the company cried “pandemic” and filed for Chapter 11 bankruptcy, it forked over $16.2 million to 340 executives on May 19, according to CNN. That included $700,000 to newly minted CEO Paul Stone, who assumed the position just three days before the bonuses were awarded. About $600,000 went to Chief Financial Officer Jamere Jackson, and the company’s chief marketing officer, Jodi Allen, received $190,000, CNN said.

In contrast, 14,300 of its employees have been let go since April 14, CNN noted. Others have been furloughed, according to a statement from Hertz Friday when it announced the bankruptcy filing, for a total of 20,000 employees — about half its workforce.

“When the effects of the crisis began to manifest in March, causing an increase in car rental cancellations and a decline in forward bookings, the Company moved quickly to adjust. Hertz took action to align expenses with significantly lower demand levels by closely managing overhead and operating costs,” Hertz said.

The company also canceled orders for new cars and started selling some of its inventory, the statement said, as well as closing some locations. In its media release Friday, the company said “senior leaders at Hertz are taking a significant reduction in pay.”

While all car rental companies were hit hard by the pandemic, especially given the precipitous drop in air travel, Hertz already carried a huge load of debt even before that, and “is in a far more precarious position than its rivals,” Fortune reported, with $24 billion in debt — almost as much as its claimed assets value — from various acquisitions over the past decade.

“This was a very difficult decision and was not easily made, knowing that many good people would be affected,” Hertz said of the layoffs. “The company hopes to bring back as many team members as possible once global travel rebounds.”