A reminder—and warning —from the Securities and Exchange Commission: public companies must properly disclose perks, benefits, and other forms of compensation paid to CEOs and other highly compensated executive officers.
On May 11, the Commission announced that the former CEO of a marketing company has agreed to pay $5.5 million to settle charges that his perks were not properly disclosed to shareholders.
According to the SEC’s order, shareholders were informed in annual filings that Miles S. Nadal received an annual perquisite allowance of $500,000 in addition to other benefits as the chairman and CEO of MDC Partners. But the SEC’s investigation found that without disclosing information to investors as required, MDC Partners also paid for Nadal’s personal use of private airplanes as well as charitable donations in his name, yacht and sports car expenses, cosmetic surgery, and a wide range of other perks.
All total, Nadal improperly obtained an additional $11.285 million in perks beyond his disclosed benefits and $500,000 annual allowances,” the SEC says. He has since resigned and returned $11.285 million to the company.
MDC Partners agreed to a $1.5 million settlement earlier this year for its role in the perk disclosure failures.
“Perks paid to corporate executives should be properly disclosed so that investors can make informed decisions,” G. Jeffrey Boujoukos, director of the SEC’s Philadelphia Regional Office, said in a statement. “Nadal improperly received and failed to disclose millions of dollars in compensation.”
Nadal consented to the SEC’s order without admitting or denying the findings and agreed to pay $1.85 million in disgorgement plus $150,000 in interest and a $3.5 million penalty. He also agreed to be barred from serving as an officer or director of a public company for five years.