August 17, 2020
SEC Settlement Includes Repayment of Incentive Comp
– Lynn Jokela
Over a year ago, Liz blogged about Hertz’s lawsuit seeking to recover incentive compensation paid to executives. The lawsuit came about after the company had to restate three years of financials. The SEC had investigated the company’s accounting and disclosure, which the company agreed to pay $16 million as part of its settlement of the matter. Now, just last week, the SEC announced it charged Hertz’s former CEO, Mark Frissora, with aiding and abetting the company in filing of its financial statements and disclosures and that Frissora has agreed to settle – with the settlement including repayment of almost $2 million in incentive compensation.
The SEC’s complaint says that, to date, Frissora hadn’t reimbursed Hertz for any portion of his incentive-based compensation received during the 12-month period following the filing of the allegedly materially false financial statements. Here’s an excerpt from the SEC’s press release (also see this Stinson blog):
The SEC’s complaint, filed in federal district court in New Jersey, charges Frissora with aiding and abetting Hertz’s reporting and books and records violations and with violating Section 304 of the Sarbanes-Oxley Act by failing to reimburse Hertz for the requisite amount of incentive-based compensation he received. Without admitting or denying the allegations, Frissora consented to a judgment permanently enjoining him from aiding and abetting any future violations of the applicable federal securities laws, requiring him to reimburse Hertz for $1,982,654 in bonus and other incentive-based compensation and requiring him to pay a $200,000 civil penalty. The settlement is subject to court approval.
The SEC’s press release says that in addition to settling fraud and other charges with the company, late last year, it also settled an order against Hertz’s former controller.