Hertz Global Holdings Inc. (HTZ:US) investor Fir Tree Partners, which holds more than 3 percent of the stock, is urging the company’s board to replace Chief Executive Officer Mark Frissora because the firm disapproves of how he’s running the car-rental provider.
Fir Tree, which holds 13.8 million Hertz shares, said Frissora, who is also chairman, is responsible for accounting and management missteps that have weighed on the shares. The stock plunged almost 13 percent today after Hertz withdrew its financial forecasts for the year and said that results will be “well below” earlier projections. Richard Broome, a company spokesman, declined to comment on the investor’s concerns.
“The CEO has had some serious missteps, and it’s time for a change,” Scott Tagliarino, a spokesman for Fir Tree Partners, said in a telephone interview. “We believe Hertz has an incredible brand and an opportunity to show leadership in the car-rental industry. We look to work constructively with management and the board to address these issues.”
Other investors holding more than 4 percent of Hertz also are urging the board to replace Frissora, according to people with knowledge of the matter who asked not to be identified because the discussions with Hertz have been private.
Hertz hasn’t reported financial results from the first or second quarters and has said that it can no longer rely on its past three years of financial statements.
Shares of the rental-car company fell 9.2 percent to $28.66 at 3:03 p.m. after reaching $27.47. The shares had risen 10 percent this year through yesterday, while Avis Budget Group Inc. (CAR:US) gained 70 percent.
Hertz also said yesterday that Scott Sider is retiring as group president of Rent A Car Americas and that lead independent director George Tamke is retiring from the board. It designated Linda Fayne Levinson as independent lead director.
The elevation of Levinson to lead director suggests the Hertz board is looking for someone to sort through the situation and take control, said Jay Lorsch, a corporate governance professor at the Harvard Business School.
“She is tough,” he said in an interview. “They were probably looking for someone to take charge. They’re picking someone who has both the breadth of business experience and the determination to get it right.”
Levinson’s experience, including as one of the first female partners at McKinsey & Co., show her gravitas, he said. She has a master’s degree in Russian literature from Harvard.
“Usually the appointment of a new lead director means the board sees a complex problem and they want someone to take charge, figure out what’s going on and get to the bottom of it,” Lorsch said. “My guess would be, with Linda, that’s what they’re trying to do.”
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