The former chief executive of Hertz Global Holdings Inc. agreed to pay nearly $2.2 million to settle claims that he pressured subordinates to “find money” to meet financial targets, causing employees to violate accounting rules, according to regulators.
Mark Frissora neither admitted nor denied the Securities and Exchange Commission’s allegations but will refund Hertz nearly $2 million in incentive compensation and pay a $200,000 penalty to the government. The deal was announced Thursday and is subject to court approval.
A lawyer for Mr. Frissora declined to comment.
In a complaint filed in New Jersey federal court, the SEC said the misconduct occurred in 2013 and 2014. Mr. Frissora left Hertz in 2014 amid disappointing financial results and accounting issues that had drawn criticism from activist investor Carl Icahn and other shareholders. Hertz paid him $10.5 million in cash, a majority of his bonus for 2014 and other equity-related compensation as part of a separation agreement. He later served as chief executive officer of Caesars Entertainment Corp., a position he left in 2019.
The SEC said Mr. Frissora, as Hertz CEO, pressed employees to find ways to close the gap between projected and actual earnings. Hertz’s staff responded by changing methodologies they used to estimate how much money the company could recover for vehicle damages caused by car renters, the SEC said. The changes had the effect of raising Hertz’s income by millions of dollars, and some of the accounting tweaks violated U.S. accounting rules, the SEC said.