BOSTON – Billionaire investor Carl Icahn, who has built his reputation on rebuilding companies, won three board seats at Hertz Global Holdings on Thursday, sending the car rental company's stock price higher in after-hours trading.
Continue Reading Below
Hertz invited Icahn's nominees onto the board less than four weeks after the New York-based investor announced that he had become the company's biggest investor with an 8.7 percent stake and that he planned to push management for changes.
The company's stock price, which has been under pressure this year, climbed $1.32, or 4.76 percent, to $29.07 in after-hours trading on news that Icahn deputies Vincent Intrieri, Samuel Merksamer and Daniel Ninivaggi would join the board.
The trio will replace three board members who are stepping down. Icahn said that, in exchange for the seats, he would not run a proxy contest.
"This agreement eliminates distraction and ensures that we stay sharply focused on delivering the significant potential of the business," Linda Fayne Levinson, Hertz' independent non-executive board chair, said in a statement.
For Hertz, it has already been a tumultuous week, kicked off with news on Monday that Mark Frissora, the company's chairman and chief executive officer, had stepped down amid pressure from Icahn and others. Hedge fund Fir Tree said publicly last month that the CEO had "lost credibility." It declined to comment on Thursday.
Continue Reading Below
A day later, an administrative error made by Icahn's team in a regulatory filing incorrectly suggested that the billionaire had upped his ownership in Gannett Co Inc while in fact he was only converting Hertz options into common stock.
Two of Icahn's representatives will join the search committee to find a permanent replacement for Frissora, the company said. Last month, some big-name investors said they wanted Scott Thompson, former CEO of Dollar Thrifty Automotive Group, to replace Frissora.
Calling Hertz a great company and a great brand, Icahn said in a news release that he expects the "right new CEO will return it to its former glory," and said he was happy that his nominees will now be instrumental in finding a new leader. He was not immediately available for further comment on Thursday.
Hertz last month withdrew its full-year financial forecast, blaming a shortage of cars due to motor industry recalls and an accounting error, which sent its stock price tumbling.
At 78, when most people are living off their investments, Icahn is still casting around to make new bets and is busier than ever in shining the spotlight on management teams he feels are underperforming. In the last few months he has pressured eBay, Family Dollar Stores and Apple.
He is also fond of saying that investors should buy a stock when his representatives get on the board and not sell until they leave, promising that good things inevitably happen when he becomes involved.
Hertz also said it would amend its shareholder rights plan, a so-called poison pill it adopted last year to prevent any one shareholder from gaining control of the company as activist investors began circling. The trigger for the poison pill will be increased to 20 percent from 10 percent. (Reporting by Svea Herbst-Bayliss; Editing by Jonathan Oatis)