Hertz CEO Change Met With Mixed Reactions

The CEO change at Hertz Global Holdings, Inc HTZ was met with mixed reactions from the Street, while shares fell as much as 4 percent on the news. The negative share movement suggests investors are not too happy with the development.

The Estero, Florida-based rental car company named Kathryn Marinello as new CEO, replacing John Tague, effective January 3. Concurrently, the company also announced the departures of three of its directors, Linda Levinson, Carl Berquist and Michael Durham, effective January 2.

It may be noted that Marinello will be the third CEO at Hertz in about two years. Tague was appointed on November 21, 2014. Such frequent top management changes may lead to investor anxiety and loss of shareholder confidence.

Carl Icahn

However, Hertz’s largest shareholder Carl Icahn welcomed the move. Ichan owns about 35 percent of Hertz's outstanding shares.

In a statement, Icahn said, "I am excited about Hertz and its prospects with Kathy at the helm. Kathy has a history as a proven CEO and I believe she is the right person to lead Hertz as we move forward. Her consistent track record of successes in consumer and financial services, as well as technology businesses, is impressive.”

MKM Partners

MKM Partners too is positive on the news, as it felt a change at the top and new leadership was possibly necessary following shareholders' frustration over the disappointing performance this year.

“We applaud the change at the Board level given that all three Board members that are resigning, approved the HQ relocation to Naples, Fl., which, in our view, has proved an unmitigated disaster with hemorrhaging of employees and the exposure of inadequate systems in the absence of employee experience,” analyst Christopher Agnew wrote in a note.

Agnew has a Buy rating and $33 price target on Hertz shares.

Credit Suisse

But, Credit Suisse’s Anjaneya Singh expressed his surprise at the management change and wondered whether Hertz’s struggles are really attributable to Tague. 

“While Ms. Marinello's background (CEO of Stream, a BPO company, as well as CEO of Ceridian, and CEO of various GE businesses) is certainly impressive, it has less of an operations bent than we would have preferred,” Singh wrote in a note.

Singh, who has a Neutral rating on the stock, believes the ideal successor should have industry specific experience, or with a related background. He also credited Tague for bringing some fleet supply discipline to the rental car industry during his tenure.

At last check, shares of Hertz had slipped 4.18 percent on the day to $24.08.