The Securities and Exchange Commission (SEC) on Wednesday announced settled charges against gas exploration and production company Gulfport Energy and its former CEO Michael Moore for failing to properly disclose as compensation certain perquisites provided to Moore and related personal expenses.
The details: From 2014 to 2018, Gulfport failed to disclose approximately $650,000 in executive compensation in the form of perks received by Moore, which included the cost of his use of the company’s chartered aircraft for certain travel, according to the SEC. Gulfport also failed to disclose costs associated with Moore’s use of a corporate credit card for personal expenses that he did not repay on a timely basis, the agency said.
The SEC’s orders also find Gulfport failed to disclose payments for services made to the landscaping company of Moore’s son in the amount of approximately $152,000 in 2015. Further, Moore failed to provide required information to Gulfport to identify these perks and personal transactions, resulting in the company making material misstatements in its annual reports and definitive proxy statements.
Remedial measures: In its order against Gulfport, the SEC credited the company with “significant cooperation” during the agency’s investigation and for undertaking “extensive remedial efforts” that included:
- Replacing the CFO and controller;
- Hiring a new general counsel and external disclosure counsel;
- Developing a new internal audit program and hiring a new director of internal audit;
- Developing a new enterprise risk management program and hiring a new risk manager;
- Adopting and implementing both a private aircraft use policy and a new travel and expense policy, as well as providing additional training regarding existing travel and expense policies; and
- Quarterly review and reporting to the audit committee regarding compliance by the company’s named executive officers with travel and expense policies.
“Gulfport failed to provide accurate disclosure of executive compensation to investors who rely on this information,” said Division of Enforcement Acting Director Melissa Hodgman in a press release. “But after discovering its disclosure failures, Gulfport’s timely remediation and cooperation in our investigation were key factors in the Commission’s decision not to impose a penalty against the company.”
The SEC’s order against Gulfport found reporting, books and records, internal accounting controls, and proxy violations, while the order against Moore found he violated the anti-fraud and proxy provisions of the federal securities laws and caused Gulfport’s reporting and books and records violations. Without admitting or denying the SEC’s findings, Gulfport and Moore agreed to cease-and-desist from further violations, and Moore agreed to pay a civil penalty in the amount of $88,248.