Hertz: Crown jewel in FL’s tax-incentives-for-jobs program under fire, again

William Patrick
|
Aug 22, 2014 12:16 PM
Hertz: Crown jewel in FL’s tax-incentives-for-jobs program under fire, again

By William Patrick | Florida Watchdog

TALLAHASSEE, Fla.— The crown jewel of Gov. Rick Scott’s tax-incentives-for-jobs commerce program is under fire because of financial issues — again.

Photo courtesy of the Governor's Office

HERTZ-ING: Gov. Rick Scott, middle, and Hertz CEO Mark Frissora, left, break ceremonial ground in November at the rental car giant’s future corporate headquarters in Estero. Lee County Commission Chairman Larry Kiker joins, right.

Hertz Global Holdings, best known as a rental car company, received a massive incentive deal last year — courtesy of state and Lee County taxpayers — to move its corporate headquarters from New Jersey to Estero, Fla.

Hertz CEO Mark Frissora was instrumental in securing the $85 million package.

Now investors are calling for his head.

Tuesday, the Fortune 300 company filed a regulatory document with the U.S. Securities and Exchange Commission in which it backtracked on its 2014 future earnings estimates.

“The Company now expects to be well below the low end of its 2014 guidance due to operational challenges in the rental car and equipment segments as well as the associated costs related to the accounting review previously disclosed,” the filing reads.

The announcement comes after a June filing stating the company’s past three years of financial statements are riddled with errors and are unreliable. That includes the period Hertz was negotiating out of the public eye with state and local officials.

An internal audit concluded, “The financial statements for 2011 should no longer be relied upon, and Hertz must restate them. Hertz also needs to correct the 2012 and 2013 financial statements to reflect these errors.”

In response, Fir Tree Partners, a hedge fund owning nearly 14 million shares of Hertz, said in a statement Frissora “has completely lost credibility.”

“We are quite puzzled to read Hertz’s assertion that they ‘have a good handle on the nature and the scope of the issues’ given how many times the company has bungled forecasts in the last year and the shocking lack of financial statements,” the firm said.

In an email, Richard Broome, Hertz executive vice president of corporate affairs and communications, told Watchdog.org “the relocation process is on track.”

“The new headquarters building in Estero is under construction, and we have over 450 headquarters employees working in Southwest Florida at present. We plan to open and move into the new headquarters (building) in late 2015,” Broome said.

Sean Helton, director of strategic communications for Enterprise Florida Inc., the state economic development organization that brokered the Hertz deal, told Watchdog.org Florida’s economic incentive programs are transparent, performance-based and include clawback provisions.