Hertz Global Holdings avoided a potential proxy battle with Carl Icahn by reaching an agreement-in-principle to allow the activist investor to choose three board members as independent directors. The three new directors – Vincent Intrieri, Samuel Merksamer and Daniel Ninivaggi – will join the board and three existing directors will retire.
In return, Icahn -- who recently acquired an 8.48-percent stake in Hertz and publicly expressed his dissatisfaction with the leadership of Mark Frissora who resigned this week – has agreed not to run a proxy contest at the company’s 2015 annual shareholders meeting and to vote in favor of the company’s nominees.
Two of the new directors will be part of the five-person search committee leading the process to find a permanent CEO to replace Frissora. This week Hertz named Brian MacDonald, who in June took over leadership of Hertz Equipment Rental Corp., as interim CEO.
“The Hertz board believes that this outcome is in the best interest of the company and all Hertz shareholders,” said Linda Fayne Levinson, independent non-executive chair of the Hertz board of directors. “This agreement eliminates distraction and ensures that we stay sharply focused on delivering the significant potential of the business.”
“Since I believe that the most important person at a company is the CEO, I’m especially happy that two of our three nominees will be on the five-person committee to find a permanent CEO,” Icahn said. “It should be noted that our three nominees were on the boards and recently involved in identifying and recruiting top CEOs that have been very effective at a number of companies we have made investments in and where all shareholder value has been meaningfully enhanced.”
Hertz also agreed to amend its investor defense mechanism, formally known as a shareholder rights plan, and informally referred to as a poison pill, which is designed to protect itself from any single shareholder gaining too much power without board consent. The limit that wouId trigger the plan was increased from 10 percent to 20 percent.
Naples, Fla.-based Hertz has yet to report financial results this year because of an accounting review covering the past three years of results. The company recently disclosed that its 2014 income would be below past guidance. Hertz earlier this year announced plans to spin off Hertz Equipment Rental Corp. into a separate company in 2015, plans that are expected to be delayed by the current accounting and management issues.