Hertz announces first-ever profit-sharing plan to benefit thousands of employees
Hertz has announced its first-ever employee profit-sharing plan.
Dubbed "Sharing in Our Success," the plan will reward employees locally and globally for helping the rental car firm achieve set targets for profitability and customer service.
The new program will supplement, not replace, the performance and incentive plans Hertz Global Holdings already has in place.
Based in Estero, Hertz Global, parent of The Hertz Corp., has more than 800 employees in Southwest Florida who could benefit.
All of the company's regular employees at the director level and below are eligible to participate, including those who are unionized.
Higher-ranking employees will not participate, as they're eligible for other incentives.
Executives received multimillions in bonuses before, during and after Hertz's Chapter 11 bankruptcy, designed both to compensate them for their hard work and to encourage them to stick with the company as it worked to get itself back on track.
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Those bonuses stirred a bit of controversy. Some former employees had to return the money — or at least a part of it — after choosing to leave the company sooner, rather than waiting it out.
Hertz argued it needed those incentives for its management team to sustain its high performance — and to continue motivating key employees to accomplish difficult tasks efficiently, maximizing the company's enterprise value for the benefit of its creditors and shareholders.
Historically, Hertz employees have earned a large part of their annual income from performance-based pay, through incentives or sales commissions.
Hertz's new CEO Stephen Scherr announced the new profit-sharing plan to lower-ranking employees last week.
In a letter, he said the plan is meant to reinforce "what can be accomplished when we work together as one team."
"The team at Hertz has a determination to win that runs deep," he wrote. "Harnessing that energy is key to our success and your hard work and achievement should be rewarded."
The decision, he explained, came after "making his way from Florida to California and on to Texas and Oklahoma, and meeting professionals that "exhibit enormous pride in our company and a sense of commitment to our organization."
"The team at Hertz has a determination to win that runs deep," he noted.
Payouts will range between 1.25% and 5.75% of an eligible employee's annual base salary, depending on how well Hertz performs, Scherr said, adding that he planned to share more details internally "in the coming weeks."
"Your continued energy, ideas and winning attitude are critical to our long-term success," he told eligible employees.
He also announced the new plan on his LinkedIn profile.
Hertz isn't the first rental car company to introduce such a plan. In fact, Enterprise Holdings, the parent of Alamo, National and Enterprise Rent-A-Car, has one that pays out "hundreds of millions" of dollars to its employees every year, according to a story by the St. Louis Business Journal.
Scherr joined Hertz Global in February. He replaced Mark Fields, who had served as Hertz's interim chief since October.
Previously, the job of CEO was held by Paul Stone, who helped guide Hertz out of bankruptcy.
The bankruptcy filing and reorganization, spurred by the coronavirus pandemic, is now far into the rearview mirror, with the company growing again with a rebound in tourism.
Scherr last worked at Goldman Sachs as a chief financial officer — a post he left at the end of last year.
He's promised to help transform Hertz for its "second century," working closely with other company leaders and employees.
As part of that promise, Scherr has pledged to put customers at the center of everything Hertz does.
"We will work to build better digital tools and create experiences that support people on the move — wherever, whenever, and however they want — safely, affordably, and in an ecologically-friendly way," he said following his appointment as Hertz's chief executive.
Last year, Hertz generated total revenues of $7.3 billion and adjusted earnings of $4.39 a share. It's scheduled to report its first-quarter results April 27, giving a glimpse into its financial performance so far this year.
The Hertz Corp. operates the Hertz, Dollar and Thrifty brands, with thousands of corporate and franchise locations throughout the country.
In May 2013, the company announced the relocation of its global headquarters from New Jersey to Estero.
The new multimillion-dollar headquarters opened in 2015.
This article originally appeared on Naples Daily News: Hertz announces first-ever employee profit-sharing plan
