Hertzs high-end property rental…
Leave pretty much any airport, and your exit will be lined with signs for a Hertz (HTZ) car-rental outlet. By contrast, the brief 8-K that Hertz filed in its trip to the Friday-night dump last week was about as quiet as could be — despite hiding a lofty perk, for Michel Taride, president of Hertz International.
Born in France, Taride has been climbing Hertz’s executive ladder since 1998: A promo video marketing the United Kingdom’s bid for the 2012 Olympics makes much of his start taking reservations and washing cars. Today, he spearheads the car rental firm’s expansion into emerging markets from his London office.
But Taride’s rise has been marked by perks beyond the mere free cars that all top Hertz executives get (as described in the company’s latest proxy): The company has been subsidizing the rent for a house since 2006. And this isn’t just any run of the mill flat — it’s pricey even by London standards.
Hertz spent _ì2.3 million ($3.6 million at today’s exchange rates) on purchasing the property sometime before promising Taride the cheap housing. For five years, the company has subsidized the cost of Taride’s residence there entirely. Now, the company has decided to wean him from the perk, effective this month.
For every year until 2015, Taride will have to pick up the tab for progressively more of his rent, in annual increments of 20%. The 8-K’s accompanying exhibit lays out the exact figures: Now he has to cover a whopping 10% of one year’s rent of _ì130,000 ($201,500), or _ì1083 ($1725) a month. By June, 2015, he has to pay 70%, or _ì7583 ($12,080) a month.
Hertz does offer Taride an alternative — one Taride might find attractive given recent signs of growth in the UK’s moribund housing market:
Through June 2015, Mr. Taride has the option to purchase the property from Hertz Europe Limited at its then appraised fair market value, minus one-third of any increase/decrease in its value from its current fair market value of _ì3.5 million ($5.4 million).
At first glance, Hertz deserves a gold star for cutting back on the subsidy. True, not having to worry about paying the rent each month could give Taride the peace of mind deliver top-notch performance. But given that he made $3.1 million in total compensation last year, we have to wonder why he needs subsidized rent in the first place. That’s especially so given that Taride’s rent is so high — it’s well above the È96,000 a year ($134,717 at today’s rates) that Dresser-Rand (DRC) paid its CEO to live in Paris, as we footnoted in March.
Plus, we wonder why Hertz is letting Taride stop at 70% of the rent, at which point the company will still be carrying more than $62,000 a year. After all, the company doesn’t seem to worry too much about keeping other employees happy — a 2009 Glassdoor employee survey placed Hertz in ninth for worst places to work.
Then again, when everyone else is against you, maybe it’s a good idea to at least keep the executives happy.
Image source: dierk schaefer via Flickr
This post was written by footnoted intern Andy Cheng, who will be entering his junior year at the University of Chicago in the fall.
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