A few months after Hertz Global Holdings Inc. first found the means to pay its top executives an extra $16.2 million mere days before declaring bankruptcy, despite its laying off thousands of employees, the car rental company is looking to dole out another $14.6 million in “bonuses,” according to Fox Business.
Hertz filed for Chapter 11 bankruptcy protection in May and immediately began casting around for ways to raise capital, including selling potentially worthless stock (which raised $29 million) in June before regulators at the Securities and Exchange Commission stepped in and asking U.S. courts to be released from its lease agreements for nearly 145,000 vehicles.
The Wall Street Journal has indicated that retention bonuses (or “stay pay”)—paid out as an incentive for top leadership to remain with the company amid its overwhelming COVID-fueled hardship—are nearly impossible for executives to obtain after a company has filed for bankruptcy. Of course, there are always ways around the rules. Despite the fact that “retention bonuses” were banned by Congress 15 years back, bankruptcy lawyers have managed to skirt the issue by instead creating “incentive” programs.
Reportedly, Hertz filed court documents on August 27 in which the proposed additional round of payouts are styled as incentive (rather than retention) bonuses, but these would need to be approved by the judge who’s overseeing the company’s bankruptcy.
While Hertz won’t release much information about which of its leaders would be awarded the extra cash, the documents reportedly put forward CEO Paul Stone and thirteen other of Hertz Corporation’s top managers to share as much as $5.4 million more, on top of bonuses they’ve already received. Stone—who took on his role in May 2020, along with a $700,000 retention bonus—may be entitled to another $1.6 million if the judge approves Hertz’ plan.
Hundreds of other executives and senior management employees who are still with the company may also stand to benefit from the proposal and could receive payments somewhere in the range of $10,000 to $15,000.
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