Hertz pushing to give $5.4M in bonuses amid bankruptcy

Hertz is pushing to grant $5.4 million in bonuses for the company’s CEO and 13 other top managers as the company in bankruptcy awaits a judge’s approval over the proposal.

In May, the company agreed to pay $16.2 million in retention bonuses to 340 employees days before the bankruptcy was filed, Bloomberg reported.

Paul Stone, the company’s chief executive, received $700,000.

The proposed new plan would collect up to $1.6 million if Hertz exceeds specific financial marks, according to court papers filed Thursday in Willmington, Del.

“It is essential that the debtors’ management remain motivated and be adequately incentivized to accomplish the new and difficult tasks before them,” Hertz said in the proposal, which first must be approved by the court judge overseeing the company’s bankruptcy.

If approved, around 295 lower-ranking managers would split up to $9.2 million under a similarly related program.

Payouts are connected with the company’s financial progress, so depending on how well Hertz performs will result between executives and managers collecting nothing or receiving the maximum payout.

Incentive programs such as the one proposed for Hertz are standard among larger corporations and are usually negotiated among senior leaders before being sent to a judge for approval.

U.S. Bankruptcy Judge Mary Walrath was asked by the company to schedule a hearing on the proposal for Sept. 17, with objections to be filed by Sept. 10.

Federal bankruptcy watchdogs and lower-ranking creditors can and will often challenge proposed payments, which force the company to justify the incentives during a court hearing.