Hertz Seeks $5.4 Million in Executive Bonuses During Bankruptcy
Hertz Seeks $5.4 Million in Executive Bonuses During Bankruptcy
(Bloomberg) -- The chief executive officer and 13 other top managers of Hertz Corp. would share as much as $5.4 million in bonuses while the company’s in bankruptcy under a proposal the rental-car firm is asking a judge to approve.
The request comes three months after the company agreed to pay $16.2 million in retention bonuses to 340 employees just days before filing for bankruptcy. Under that program, CEO Paul Stone received $700,000. Under the new plan, Stone would collect as much as $1.6 million if Hertz exceeds certain financial targets, according to court papers filed Thursday in federal court in Wilmington, Delaware.
“It is essential that the debtors’ management remain motivated and be adequately incentivized to accomplish the new and difficult tasks before them,” Hertz said in the proposal, which must be approved by the judge overseeing the bankruptcy.
About another 295 lower-ranking managers would split as much as $9.2 million under a related program. The payouts are tied to the company’s financial progress and depending on how well Hertz does, the executives and other managers could collect nothing, or get the maximum payout.
Such incentive programs are common in big corporate bankruptcies and are typically negotiated with senior lenders before being presented to a judge for approval.
Lower-ranking creditors and the federal bankruptcy watchdog, the Office of the U.S. Trustee, often challenge the proposed payments forcing the bankrupt company to justify the incentive programs at a court hearing.
The official committee of unsecured creditors may support the bonus program once they finish studying the details, according to the court filing.
Hertz has asked U.S. Bankruptcy Judge Mary Walrath to schedule a hearing on the proposal for Sept. 17; objections would be filed by Sept. 10
The case is Hertz Corp. 20-11218, U.S. Bankruptcy Court, District of Delaware (Wilmington)
To see the docket on Bloomberg Law click here
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