Hertz Global Holdings Inc. climbed after the rental-car company said it finished restating more than two years of financial results and expects to reach annualized cost savings of $300 million by year-end, $100 million more than its goal.
The company identified $207 million in additional pretax misstatements from 2011 through 2013, according to a statement Thursday. The misstatements reduced pretax income by as much as 23 percent and net income by as much as 26 percent.
Hertz also said it expects to complete the separation of its equipment-leasing unit, announced in March 2014, in 2016’s second quarter. The company also reaffirmed a $1 billion share-repurchase plan, unveiled at the same time.
The stock rose as much as 20 percent to $20.47 in trading after the close of the New York Stock Exchange. Hertz had fallen 32 percent this year through the close Thursday.
The company’s investigation found that the tone at the top of the company was “inconsistent and sometimes inappropriate,” according to a filing with U.S. regulators.
“In particular, our former chief executive officer’s management style and temperament created a pressurized operating environment,” the company said.
Hertz had said in September that Mark Frissora, now the CEO of Caesars Entertainment Corp., resigned for personal reasons. Investors had pushed for his removal, citing accounting and operational missteps.
“The tone at the top stuff is very serious,” said Maryann Keller, an independent auto-industry consultant who was on Dollar Thrifty’s board until Hertz bought the smaller rival. “They’re basically saying that the CEO caused other people to act in ways that are unethical. So where does the SEC investigation go now?”
The board, she added, should have “had the presence of mind to question him.”
Hertz said it was notified in June 2014 by the Securities and Exchange Commission that it was investigating its filings. The company said it’s cooperating and can’t predict the outcome.
In November, Hertz appointed former United Airlines manager John Tague as CEO, choosing him over Scott Thompson, the former Dollar Thrifty CEO, whom investor Jana Partners had called the “obvious choice” for the job.
Tague, who had been CEO of transportation provider Cardinal Logistics Holdings, was described by a former employee as a “customer-focused” executive. Steve Miller, who will take over as CEO of International Automotive Components Group next month, was a United director during Tague’s tenure. He said Tague “has a great business head on him.”