Last week, the SEC announced that the former CEO of a marketing company had agreed to pay $5.5 million to settle charges that his perks were not properly disclosed to shareholders (also see Broc’s Blog: Other Shoe Drops in SEC’s Enforcement Case). This isn’t the first time the SEC has taken action against a company and its executives for improper perk disclosure (see SEC Brings Litigation for the Alleged Failure to Disclose Perks), but it is the first one in a while.
MDC Partners reported that CEO Miles S. Nadal received an annual perquisite allowance of $500,000 in addition to other benefits. However, the SEC’s investigation found that MDC Partners had 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. (Cosmetic surgery! Why didn’t we think to ask for that!) In total, Nadal had improperly obtained an additional $11.285 million in perks beyond the amounts disclosed.
Earlier, MDC Partners had agreed to a $1.5 million settlement with the SEC for its role in the perk disclosure failures. According to the SEC, Mr. Nadal resigned from the company, returned $11.285 million to the company, and agreed to pay $1.85 million in disgorgement plus $150,000 in interest and a $3.5 million penalty to the SEC. (But he looks years younger!)