I suppose I should be getting tired of writing about enforcement actions involving nondisclosure of perquisites (for example, see here), and that you’re getting tired of reading about them. However, the topic is hard to resist, whether due to schadenfreude (look it up) or other factors.
The most recent such enforcement action, announced in late November, told a story similar to those told before – a CEO who used corporate aircraft for personal travel, used corporate credit cards for personal expenses, and so on, resulting in a failure to disclose more than $425,000 in “perks” over a two-year period. The CEO also pledged all of his company stock in violation of a shareholders agreement that required the prior written consent of the company, but that’s another story. Suffice it to say that the company and the CEO were hit with a variety of charges, including a failure to maintain accurate books and records.
If this elicits yawns or eye-rolling that we’ve seen this movie before, so be it. However, there is a twist. Specifically, the SEC’s report noted that the CEO did not disclose the relevant information in his questionnaires – and in some cases had not completed a questionnaire at all. I don’t recall the SEC focusing on the lowly D&O questionnaire in the past. Anyone who has pulled his or her hair out trying to get a director or officer to complete a questionnaire is now smiling and saying “Ha! It serves him right!” (The same goes for all those directors and officers who complete every questionnaire by saying “please fill it out for me” or “no change from last year” regardless of whether there are changes.)
Continue Reading Another perquisites enforcement action…with a twist or three