Hertz paid out $24m in bonuses

Hertz paid more than $US16m in retention bonuses to senior managers just days before it filed for bankruptcy on Friday.

Hertz Global Holdings paid more than $US16m in retention bonuses to senior managers, including its new chief executive, just days before it filed for bankruptcy on Friday night.

The car rental company said it agreed to pay a $US700,000 bonus to chief executive Paul Stone, who was named to the post this month. Chief financial officer Jamere Jackson received $US600,000 and chief marketing officer Jodi Allen received $US189,633, according to a Tuesday regulatory filing.

In all, Hertz said it would pay $US16.2m ($24.4m) in cash ­bonuses to about 340 employees in recognition of uncertainty the company and its employees faced as a result of the coronavirus pandemic’s impact on travel.

Hertz is the latest troubled company to make payments to top executives before filing for bankruptcy. By paying bonuses before filing, companies do not need bankruptcy court ­approval.

Jared Ellias, a law professor at the University of California, Hastings School of Law, said that while the law prevented companies in bankruptcy from paying such bonuses, companies were still able to do so right before they filed. “The window is wide open,” Mr Ellias said.

Proponents of such payments say they are needed to keep the best executives from jumping ship when they are needed most. Detractors say they let top-level managers to enrich themselves.