Barry Rosenstein, the manager of JANA Partners, has sent a letter to the Board of Directors of Hertz Global Holdings, Inc. (NYSE:HTZ) proposing a candidate to be nominated as the CEO of the company. JANA Partners owns a 7% stake in Hertz, the stake containing 32.03 million shares of the company, including options to buy around 11.38 million shares.
In his letter, Mr. Rosenstein stated that the best-suited CEO for Hertz Global Holdings, Inc. (NYSE:HTZ) is Scott Thompson. Mr. Thompson was the CEO of Dollar Thrifty, a company that was acquired by Hertz Global Holdings in 2012. Mr. Thompson served as the CEO of Dollar Thrifty since 2008 and in 2011 he was appointed as the Chairman of the board of the company. ” Hertz’s next CEO must be able to fully address the following issues, and we believe Mr. Thompson has more than demonstrated he is capable of doing so,” Mr. Rosenstein said.
JANA Partners boosted its stake in Hertz Global Holdings, Inc. (NYSE:HTZ) in October, reporting the acquisition of 7.79 million shares in open market transactions and purchasing 4.70 million shares through options.
Hertz Global Holdings, Inc. (NYSE:HTZ)’s stock has lost a lot of ground this year, amid the company facing some issues with its financial statements reporting. In May, the company discovered that its financial statements for the previous quarters had some mistakes, with the stock losing 30% after the announcement. However, activist investors took it as a sign to step up. Carl Icahn initiated an 8.5% stake in August and requested board seats later, which have been offered to him in September.
However, Mr. Icahn did not stop at getting board seats. Together with other investors, Mr. Icahn proposed for the former CEO Mark Frissora to be replaced. At the beginning of September, Mr. Frissora announced his decision to step down for personal reasons.
Aside from proposing a candidate to be appointed as the CEO of Hertz Global Holdings, Inc. (NYSE:HTZ), Mr. Rosenstein also emphasized the poor performance of Hertz’s stock in comparison to its peers among car rental companies. For example, Avis returned 73% over the last year, versus Hertz’s decline of 12%, while over the last three years, Avis surged by more than 300%, versus Hertz’s return of 75%.
In this way, the investor considers that Mr. Thompson is a suitable candidate because he has experience in managing fleet costs being the CEO of Dollar Thrifty and the founder and CFO of Group 1 Automotive. He also has experience in negotiating retail and wholesale automotive purchases from all major companies. “
“In fact, by negotiating better pricing, maximizing the useful life of each vehicle and employing disciplined selling, Mr. Thompson took Dollar Thrifty’s annual fleet costs from the highest among its publicly-traded peers to the lowest, despite Dollar Thrifty being the smallest company in this group,” Mr. Rosenstein added.
The full text of the letter is available below:
Barry Rosenstein Letter to Hertz
Mr. Rosenstein is a notorious activist investor, whose activity is important to keep good track of. In October, JANA Partners raised its stake in Walgreen Company (NYSE:WAG) by 1.25 million shares to 13.75 million shares. Mr. Rosenstein also serves on the board of Walgreen Company since September. A couple of weeks ago, JANA Partners entered into an agreement with Civeo Corp (NYSE:CVEO), under the terms of which, Civeo added three new indepent directors, expanding its Board size to 11 directors, 10 of whom are independent.
The arguments that Mr. Rosenstein presented in favour of Mr. Thompson are very reasonable and even though Hertz Global Holdings, Inc. (NYSE:HTZ)’ acquisition of Dollar Thrifty has been more profitable for the shareholders of the latter, the board should examine this possibility. However, one thing that is clear is that Hertz needs a good CEO and soon, otherwise its investors will continue to be disappointed because of company’s underperformance.
Disclosure: none
