December 07, 2021

Warren Slams Hertz $2B Stock Buyback Plan, Calls for Rental Car Giant to Explain Why It’s Rewarding Executives and Private Equity Firm as Rental Car Costs Soar

Hertz has Reaped Record Profits and Richly Rewarded Executives While Downsizing its Fleet and Raising Rental Prices for Consumers 147%

Warren: “You owe your customers and the public an explanation for this $2 billion buyback, and whether it is in the best interests of the long-term health of the company and its consumers.”

Text of Letter (PDF)

WASHINGTON, D.C. — United States Senator Elizabeth Warren (D-Mass.) is slamming Hertz’s $2 billion dollar buyback plan which would line the pockets of company executives and the private equity firm Apollo Global Management, while stiffing consumers with soaring rental car costs. Hertz, which was loaded with debt before the pandemic, was unable to withstand the economic fallout of COVID-19 and filed for bankruptcy in May 2020. Yet, as thousands of employees were laid off, the company rewarded executives with massive bonuses, and in the last year has recorded record profits while raising rental prices for consumers by 147% compared to pre-pandemic. In a letter to Interim Chief Executive Officer Mark Fields, Senator Warren called out Hertz’s corporate greed and demanded a public explanation for the recent buyback program, the financial benefits Hertz executives and Apollo will reap, and the high costs being passed onto rental car customers.

“Hertz’s recent proposal to spend as much as $2 billion buying back stock is poised to primarily benefit the private equity firm Apollo Global Management and line the pockets of executives at the expense of customers and the long-term health of the company. This decision, and other actions taken before and after their bankruptcy process, reveals that the company is happy to reward executives, company insiders, and big shareholders while stiffing consumers with record-high rental car costs and ignoring the recent history that nearly wiped out the company. Consumers are struggling to make ends meet as costs rise throughout the economy and Hertz owes the public an explanation for this corporate greed,” said Senator Warren. 

In the midst of their bankruptcy filing in 2020, Hertz fired or furloughed approximately 20,000 of its employees and cut the size of its fleet by nearly one third. However, top executives were rewarded with bonuses — paying $16 million to top executives and managers days before filing for bankruptcy, and an additional $3 million in “retention bonuses” to executives 45 days after it left bankruptcy in June 2020. Now, the $2 billion buyback program would give the private equity firm Apollo —  which has already earned nearly $3.7 billion in profits in the first nine months of 2021 — a 70% annualized return on its initial investment. Hertz has raked in huge profits following bankruptcy, with $605 million in income and a record high profit margin of 39% amid the pandemic recovery. 

Senator Warren called out Hertz’s role in jacking up rental prices on consumers. While car and truck rental prices have increased overall by 39% between October 2020 and October 2021, Hertz’s prices have skyrocketed. One analysis found that they were charging a daily median rental price of $114.49 in August 2021, a 147% increase compared to pre-pandemic prices. The latest buybacks raise serious questions about how the move aligns with the long-term health of the company, and whether Hertz is doing all it can to shield consumers from rising prices. Senator Warren is calling for answers to her questions no later than December 17, 2021. 

As a champion for American consumers and a secure and healthy economy, Senator Warren has called out greedy corporations with soaring profits for their roles in jacking up prices for American consumers and driving inflation. 

Additionally, Senator Warren supports a provision in the Build Back Better plan that would create a 1% tax on stock buybacks and raise $124 billion over 10 years to fund key policies to support American families. The tax would help crack down on corporate greed and encourage big companies to invest in their workforce instead of executives' bank accounts.