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Over the last few weeks, we’ve seen many airlines file for bankruptcy protection. Customer demand remains low and it triggered a massive slowdown for business. Just this week, we saw LATAM US announce that they’re filing for Chapter 11. As many businesses face bankruptcy fears, one particular story is gaining traction. Apparently, before Hertz filed for bankruptcy, it paid millions in bonuses to its top executives.

Hertz Bankruptcy Filing

As per this CNN Business report, Hertz paid out the bonuses just before filing for bankruptcy and after announcing the layoffs of thousands of its employees.

Hertz (HTZ) paid a total of $16.2 million to 340 executives on May 19 as part of a plan to keep them in place while the company attempts to reorganize, the company announced in a filing with the Securities and Exchange Commission. The executives will be required to return the money should they leave Hertz on their own before March 31, 2021.

The report details payments to some of Hertz’s top executives.
Paul Stone, who was just promoted to CEO three days before the retention bonuses were awarded, got $700,000 under the plan. Chief Financial Officer Jamere Jackson got $600,000, while Chief Marketing Officer Jodi Allen got about $190,000.
Companies often pay their key executives lucrative retention bonuses so that they don’t leave the company. However, these bonuses have a very different backdrop:
  • Hertz has let go almost 50% of their staff, around 14,300 workers since April 14
  • The company recently announced that it plans to close even more locations. These closures are bound to trigger more job losses
  • ┬áHertz owes $11 million in termination pay to 2,500 of its employees

 

News report courtesy CNN Business, video report courtesy CNBC

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