Hertz paid top executives $16 million in bonuses days before filing for bankruptcy
The struggling company paid 340 executives a total of $16.2 million in retention bonuses as it prepares for a massive restructuring
Days before Hertz filed for bankruptcy, the company paid a total of $16.2 million to 340 executives to incentivize them to stay with the company as it attempts to restructure. Last month, the struggling car rental company began laying off thousands of employees.
Retention bonuses for executives at failing companies are not uncommon, they are meant to encourage top talent to see the ship through stormy waters, in addition to compensating key figures for shouldering additional uncertainty and responsibility as a company reduces its work force.
The brand new CEO of Hertz, Paul Stone, will receive $700,000, while the chief financial officer will be paid $600,000. The chief marketing officer is also being awarded a $190,000 bonus.
The executive bonuses are contingent upon the employees remaining with the company through March 31, 2021.
Hertz was suffering from serious financial issues even before the pandemic. But the significant decrease in air travel since early March was the kiss of death for the company, which has let go 14,300 workers since mid-April.
Though the company still owes roughly $11 million in severance pay to 2,500 employees, bankruptcy laws make it somewhat difficult for companies continue paying those severances after a bankruptcy filings.
Hertz’s legal team has filed a motion with the bankruptcy court, asking that it be allowed to continue dispensing severance pay to its employees. The company is attempting to maintain goodwill among the let-go staff, in the hopes that it will be able to rehire some number of them after air-travel resumes at a more normal volume.
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