The Securities and Exchange Commission charged former Caesars Entertainment CEO Mark Frissora with filing inaccurate financial statements and disclosures during his time as CEO and chairman of Hertz Car Rental Corp.
Frissora, who stepped down from his position with Caesars more than a year ago, agreed to settle the charges and repay Hertz nearly $2 million in incentive-based compensation, according to a statement Thursday from the SEC.
The SEC’s complaint alleged that as the nationwide rental car company’s financial results fell short of its forecasts during 2013, Frissora pressured subordinates to “find money,” principally by re-analyzing reserve accounts, causing Hertz’s staff to make accounting changes that rendered the company’s financial reports materially inaccurate.
The complaint alleges that Frissora approved Hertz’s reaffirming its earnings guidance in November 2013, despite Hertz’s internal calculations that projected lower earnings per share figures. Hertz revised its financial results in 2014 and restated the numbers in July 2015, reducing the company’s previously reported pretax income by $235 million.
In December 2018, Hertz agreed to pay $16 million to settle fraud and other SEC charges.
The charges against Frissora were filed Thursday in federal district court in New Jersey.
Frissora did not admit nor deny the allegations but consented to a judgment “permanently enjoining him from violating any future violations of the applicable federal securities laws.”
He was required to reimburse Hertz for $1,982,654 in bonus and other incentive-based compensation and is required to pay a $200,000 civil penalty.
The settlement is subject to court approval.
“Investors are entitled to accurate and reliable disclosures of material information about a company’s financial condition,” Marc Berger, director of the SEC’s New York Regional Office, said in a statement. “We are committed to holding corporate executives accountable when their actions deprive investors of such information.”
After leaving Hertz, Frissora joined Caesars in 2015 after the company entered a Chapter 11 bankruptcy reorganization. He took over from then-CEO Gary Loveman, who remained chairman of the company until 2017.
Caesars emerged from bankruptcy in October 2017, which included spinning off ownership of some 20 Caesars resorts into VICI Properties, which leased the operations back to Caesars.
In 2018, Frissora had reportedly fallen out of favor with certain large Caesars shareholders, mainly hedge funds that gained ownership after the bankruptcy was finalized.
On the company’s second-quarter earnings call, Frissora complained that much of Caesars stock was owned “by people not in it for the long-haul.” A few weeks later, Frissora purchased nearly $1 million of the company’s stock as a vote of confidence.
In November 2018, he announced he would leave his position in February 2019. In between those months, corporate raider Carl Icahn gained control of Caesars through stock acquisitions. Frissora stayed on until April 2019 when long-time gaming executive Tony Rodio was named CEO. Caesars was sold in July to Eldorado Resorts in a $17.3 billion merger. The combined company, now managed by the former Eldorado executives, retained the name Caesars.
When Frissora announced his plans to step down, Caesars, in a November 2018 SEC filing, said Frissora would be retained as a consultant for six months after Feb. 9 and will be paid $83,333 per month. Frissora would also receive a severance of $8 million, payable over 24 months, as well as a bonus and other benefits, including stock options.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
