$5 M in signing bonuses for 3 Hertz execs?

Attached to the 10-K that Hertz filed on Monday – which, we’ll note, came in less than two minutes before the deadline for companies on a calendar year – were three very interesting exhibits.

Taken together as a whole, they added up to $5 million in signing bonuses and over $25 million in equity for three executives, all of whom were hired in January 2015. It made us wonder whether the folks who have been driving Hertz’s stock up the past few days — nearly 30% over the past five trading days — had given any thought to those exhibits attached to the 10-K.

We’ve been reading filings for over a decade and while there’s certainly a fair amount of wiggle room in terms of disclosure, it’s pretty rare to wait more than a year to provide compensation details on one executive, let alone three.

Some companies provide this sort of information in an 8-K filed the same day of the announcement or shortly thereafter. Others wait until the next major filing comes out — a K or a Q. But Hertz chose a different option:  It simply sat on the agreements until Monday evening. Given what those agreements spell out, and the timing of the filing, plus the fact that the 10-K was filed the same day that Hertz reported its fourth quarter results, we think that it’s hard to argue that it was simply coincidental or a mere oversight.

While the company announced the hiring of Tyler Best on Jan. 6, 2015 and then quickly followed up with announcements about Jeffrey Foland and Tom Sabatino, the actual agreements with each of the executives were attached to the 10-K that the company filed late on Monday. What they spell out are hefty signing bonuses and generous stock grants for each of the three executives.

Let’s start with Best’s agreement, which provides for a $2 million signing bonus and a $3.2 million equity grant for 2015. The target bonus is equal to his base salary of $600K, although for 2015, he was due to receive an additional $300K as part of an “additional bonus opportunity.”

Foland, who joined the company from United Airlines, was given a $2 million signing bonus, $7.5 million in restricted stock and an additional $5 million in equity. That’s in addition to a base salary of $850K and a target bonus of $1.1 million for 2015. Not to mention an “additional bonus” of $350K, according to his term sheet.

Sabatino, who joined the company from Walgreens Boots Alliance, was given a $1.5 million signing bonus, $5 million in RSUs, and an additional $4 million in stock. That’s in additional to a target bonus of $945K and a base salary of $700K.

Despite all of this well-compensated talent, Hertz stock fell by about 2/3 in 2015. So the fact that it’s been rebounding the past few days is probably small comfort to investors.

But this isn’t just about the money, even though that’s certainly a big part. It’s about the uneven disclosure rules that allow a company like Hertz to bury this sort of information in an exhibit to their 10-K, hoping that few people bother to pay attention.

Two weeks ago, SEC Chair Mary Jo White gave what was viewed a major speech on improving disclosure. Judging by this filing, we still have a long way to go on that front.