Company Settles SEC Charges for Failure to Disclose Perquisites in Proxy Statements

A public company and its former executive vice president settled SEC charges (see here and here) for disclosure violations in proxy statements.

According to the SEC, the company failed to disclose in its definitive proxy statements, at least $1.3 million in perquisites and personal benefits provided to several named executive officers and a director, over a period of four years. The perquisites at issue consisted largely of benefits related to the use of the corporate aircraft. The unreported perquisites resulted in the disclosure of inaccurate (an artificially reduced) "All Other Compensation" and "Total Compensation" amounts for each of the impacted individuals in the summary compensation table. As a result, the SEC charged that the company violated Exchange Act Sections 13(a) ("Periodical and other reports") and 14(a) ("Proxies") and Rules 12b-20 ("Additional information"), 13a-1 ("Requirements of annual reports"), and 14a-3 ("Information to be furnished to security holders") thereunder.

To settle the charges, the company agreed to cease and desist from further regulatory violations, but will not have to pay a civil penalty based on its cooperation with the SEC, corrective disclosures, and implementation of measures designed to ensure future compliance with the relevant disclosure rules. Separately, the former executive agreed to (i) cease and desist from further regulatory violations and (ii) pay a $75,000 civil money penalty.