According to Forbes, the company has filed a suit against former CEO Mark Frissora, ex-Chief Financial Officer Elyse Douglas and former General Counsel J. Jeffrey Zimmerman, with the company looking to claw back $70 million in incentive and severance payments from the executives.
Hertz has requested that the court evaluate the damages caused by the violations that occurred between the fiscal years 2011 to 2013. The company explained that the fallout resulted in “a lengthy and costly investigation by the Securities Exchange Commission, additional significant fees paid to Hertz’s accountants, defense of class and derivative suits by shareholders and substantial damage to Hertz’s business.”
In addition, an investigation by the company’s compensation committee found that the former executives’ “mismanagement caused or contributed to the restatement of the financial results” that the incentive and severance payments were based on.
Clawbacks are a way for companies to hold their executives accountable for any instance of wrongdoing during their time in charge. Just last month, two U.S. senators proposed legislation that would broaden the ability of the SEC to claw back money on behalf of investors victimized in financial crimes.
Specifically, the legislation from Senators John Kennedy, Republican from Louisiana, and Mark Warner, Democrat from Virginia, would give the SEC a decade to pursue restitution, where funds recovered would go to the victims. The proposed decade-limitation would give the Commission a chance to spot and pursue hard-to-detect financial crimes, according to the lawmakers.
“Financial fraudsters can sometimes go on for years, even decades, before they finally get caught,” a statement from Senator Warner said at the time. “They shouldn’t be able to rip off investors just because some arbitrary five-year window has expired.”