Hertz Global Holdings has suspended an employee stock-purchase program in the wake of an accounting review that found errors in three years of financial statements.
The car-rental company informed employees enrolled in the program that their participation must be postponed “in light of the accounting matters facing the company,” according to an internal memo seen by Coins2Day.
Hertz (HTZ) intends to refund any deductions withheld as of April 1 this year, as well as any residual contributions from the prior period. No deductions will be withheld from employee paychecks during the quarterly purchase period that begins July 1 “until further notice,” the memo said.
Hertz first noticed errors earlier this year when it was preparing its first quarter results, which resulted in a delayed 10-Q filing with the Securities and Exchange Commission. The company has concluded its 2011 financial statements can no longer be relied on, and also needs to correct the 2012 and 2013 statements to reflect those errors. The varying accounting issues could affect the timing of Hertz’s planned spin-off of its equipment-leasing business.
“This accounting review has no impact on Hertz’s business, which remains sound,” a Hertz representative said in a statement on Wednesday. “The company is putting all of the necessary resources and efforts toward getting this matter resolved. While it will take time to complete this process, we are making progress.”
An employee-stock purchase program is a type of broad-based stock plan that allows employees to buy their company’s shares at a reduced price. Typically the program’s discount is up to 15%.
The suspension of Hertz’s employee stock-purchase program affects less than 10% of the company’s U.S.-based employees. Hertz employed about 22,800 in the U.S. At the end of 2013.
The finance team at Hertz has been undergoing significant changes since former Chief Financial Officer Elyse Douglas stepped down from the role last year. Hertz has said new CFO Thomas Kennedy is spearheading an effort to rebuild the financial team. A Hertz representative on Wednesday said the company was in the process of implementing new procedures and controls, as well as adding new personnel to the accounting and finance departments.