A very expensive year for Hertz

How much is a year of, presumably, hard work worth? At Hertz Global Holdings, the answer is north of $8 million.

Last week, Hertz filed this 8-K disclosing severance details for Hertz Equipment Rental Corp. (HERC) CEO Brian MacDonald. As both this press release and the filing noted, MacDonald stepped down on May 20. Unlike similar announcements and 8-Ks, the “personal reasons” or “more time with the family” language wasn’t trotted out. Ditto for the language about “no disagreements” that is standard fare in most 8Ks announcing a sudden departure.

Indeed the press release, didn’t even have the perfunctory quote from the company’s CEO praising MacDonald. Instead, CEO John Tague was quoted as saying that newly appointed HERC CEO Larry Silber “will reenergize HERC’s performance on the topline and importantly in dollar value utilization, which is a key performance driver for this industry.” Ouch!

But MacDonald shouldn’t be too upset. As Wednesday’s filing noted, he will receive $5.1 million in severance, another $3 million as payment in lieu of equity awards, an undetermined pro-rata bonus for 2015 and two years of health coverage. Given that he was only named to the post last June 2, that’s a generous payday for less than a year’s work.

The reason for the hefty payout appears to be language that the company included in its agreement with MacDonald when it named him interim CEO last September after Mark Frissora got the boot. MacDonald’s employment agreement from Nov. 14 notes that if Hertz, which has not filed a 10-K or a 10-Q since March 2014, has not met its regulatory requirements by MacDonald’s departure, the company would pay him $3 million.

In our subscription-only service, we flagged Hertz more than any other company in 2014, primarily for its late filings and the various disclosures its made in those filings over the past 18 months. It now says that it plans to file by mid-year, after previously promising filings by last November and June 30.

MacDonald isn’t the only top executive who has cashed in from Hertz. This 8-K from mid-September shows that Frissora received over $10m in severance. And last December, former General Counsel Jeff Zimmerman stepped down, receiving around $2 million in severance.

Hertz may be struggling to get its filings in on time, but it seems to have no problem doling out hefty severance awards to departing executives, even those who don’t even warrant flowery language in the press release announcing their departure.