2 minutes ago by elliekelly
What is the ten-year survival rate for companies after a leveraged buyout? It has to be near zero right?
an hour ago by rb808
> The company also found that Dollar Thrifty had let the tires on its cars get thinner than Hertz allowed, and many had to be replaced at a cost of $30 million
I always wonder if its worth going cheaper or more expensive when renting cars. Stuff like this is interesting, I wonder how many other corners are cut at the cheaper places.
12 minutes ago by hylaride
I've always rented from Hertz because they've historically been the least hassle, if more expensive than Enterprise.
I live in downtown Toronto and don't own a car. I use car sharing for local needs, but the traditional car rental companies for when I need to leave the city. Enterprise has been consistently terrible. On multiple occasions I've had to wait hours past my scheduled pick-up time due to either understaffing, overbooking, and/or due to other events. Enterprise apparently has a deal with insurance companies where they loan cars after accidents. I once had to wait 12 hours for a car as they were over-booked due to accidents after a snow storm. One time I was rear-ended in an enterprise-rented car. The other person's insurance dealt with the damages, but 18 months later they called me up, demanding payment for the time the car was in the shop.
I used to rent from national/alamo as they would rent to me w/o mandatory extra insurance when I was under 25. They were bought out by enterprise and I almost immediately went downhill.
Hertz has always had a car available when promised. I can also take the rentals across the border to the US w/o extra fees. Twice they had to upsize my car for whatever reasons and they gave me a discount to deal with the greater fuel consumption.
As somebody who is a loyal Hertz customer, I worry what the company will look like after the bankruptcy.
an hour ago by juskrey
I was able to get very cheap deals at renown companies with high quality service and also had to use expensive deals at very shitty ones.
With massive rental cars franchising you never know. Rental car is always a potential problem and should be treated as such.
Hence, the main property you should be looking for is how does the rental company manage problems. Starting from the rental garage (when you point to some issue like worn out tires) and throughout the road. Also it means you should make some trial and errors.
6 hours ago by wolco
In the end Kathryn Marinello failed. She was at the helm for years where she could have positioned the company better. Blaming it on a 2014 misfilling and the wasted years cleaning it up only gives false cover. She didn't pay back debit when times were better because it would have affected her compension.
6 hours ago by eru
Why do you say Kathryn Marinello failed?
Compensation incentives are there for a reason. Acting according to them just means fulfilling the shareholders wishes. (Unless the shareholders are idiots or impotent and the board set the wrong incentives.)
Running a riskier strategy that fails under a pandemic is a perfectly cromulent business decision to make. Shareholders and creditors knew what they were in for.
Not all gambles pay off. That doesn't mean taking on any risk whatsoever is wrong.
3 hours ago by virgilp
> Unless the shareholders are idiots or impotent and the board set the wrong incentives.
That's quite a big leap. Humans are exceptionally good at gaming objective metrics if that's all that matters... setting the right incentives is by no means something any non-idiot can do; it's in fact exceptionally rare to find people able to set right incentives for an entire organization (or for it's leadership; if the leadership doesn't inherently have the right motivation, I don't actually think you can fix that via a set of incentives; probably the best you can do is constantly-modifying incentives, tracking aggressively any sign of misaligned motivation etc)
2 hours ago by eru
Yes, that is indeed a problem.
However, CEO and shareholders are playing a repeated game here. So they can retro-actively reward last years performance by giving more (or less) money for next year.
Mostly, shareholders do want CEOs to take some amount of risk. And giving your CEO eg stock options means you want to encourage risk taking.
If you want your CEO to be careful, you pay them in eg long term company debt instead.
Exactly how you align the precise risk appetites is a harder problem. And there might be some loopholes clever management can exploit. But the broad strokes are clear.
an hour ago by appleflaxen
> Humans are exceptionally good at gaming objective metrics if that's all that matters
I think that's OP's point: the board should understand that, and set them appropriately.
5 hours ago by ramraj07
So by that logic the shareholders and board members _were_ idiots then.
5 hours ago by xapata
Making a bet and losing doesn't imply idiocy. What were the odds? What was the potential payoff?
4 hours ago by 082349872349872
Shareholders also diversify over several firms ā so the individual parts of a portfolio should run at riskier positions on the efficient frontier than shareholders (already the investors with the highest risk appetite) wish to have for themselves.
2 hours ago by smt88
Good comment that I was going to make myself. I hope you won't mind if I translate for people (perhaps non-native English speakers) unfamiliar with the jargon:
Large investors have stock in many companies. Some are low-risk, some are high-risk. Ideally, these will balance each other out. In theory, this allows large, publicly-traded companies to do risky things. Amazon was a great example of this for years.
The problem is that some companies are perceived as risky or not-risky by different investors.
If 30% of their shareholders want a conservative strategy and 30% of them want a risky strategy, the conservative shareholders will always win because it's easier to build a coalition around "don't do anything" than it is around "do something". "Do something" can mean any one of a billion different strategies, and it's very hard to get a large group to agree on one.
6 hours ago by mft_
She took over in Jan 2017 - three years isnāt much to pay back $20Bn of debt.
Probably fairer to say that a decade of CEOs all failed.
5 hours ago by LatteLazy
I donāt know if thatās fair. Hertz floundered for over a decade with leveraged buyouts, failed mergers, market missteps and accounting falsehoods. She got 9 quarters to turn that around, she was headed in the right direction, but it was too little too late.
6 hours ago by LaundroMat
Then maybe the people who have decided the compensation structures are more to blame?
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