Hertz Financial Review Leads To Restated 2011-2013 Results
- Updated: November 14, 2014
Hertz Global Holdings Inc. (NYSE:HTZ) has announced that it will continue a financial review that has found $87 million of errors to date and will be restating its financial results for the years 2011, 2012, and 2013. The report seems to have shaken investor confidence in the company. After the announcement, shares in the company dropped 4.2 percent to $21.77. Hertz shares have recorded a 21 percent decline for the year. The company is based in Naples, Florida.
Hertz has been under investigation from the U.S. Securities and Exchange Commission since June. The financial mistakes found by the investigation have been blamed on material weaknesses in the company’s internal controls, rendering its accounting procedures ineffective. Former chairman and CEO Mark Frissora resigned in September after the announcement of the investigation.
Hertz Global Holdings Inc. (NYSE:HTZ) has been facing increased pressure from shareholders to appoint a permanent top executive for the company. Billionaire investor Carl Icahn, who holds a stake of more than 8 percent in the company, has been one of the activist shareholders calling for a reorganization of the company’s leadership. Hertz has already replaced some of its directors with new personnel recommended by Mr. Icahn.
The board has delayed making a decision on a new CEO until the investigation into the financial mistakes and management’s influence over those mistakes has been completed. Interim CEO Brian MacDonald is expected to remain in place until the accounting review is completed, which Hertz Global Holdings Inc. (NYSE:HTZ) predicts will be around mid-2015. He is slated to receive compensation of $1.1 million in annual base salary and a special cash incentive of $500,000, paid on an annualized basis.
To please investors, Hertz is planning to begin a cost-reduction program that is estimated to save the company $100 million. The company is planning to start buying more vehicles that it can sell back to the manufacturer later at previously agreed upon prices. The company has also increased the rate at which it is selling its highest-mileage cars by 45 percent and has already sold 40 percent of the vehicles it planned to sell during the fourth quarter.
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