Yet Another Perks Enforcement Case!
By George Wilson
As we have blogged about on previous occasions, the SEC Enforcement Division is actively watching for companies that fail to adequately disclose executive perks. In a recent case against ProPetro Holding Corp., an oilfield services company, and its former CEO, the SEC underscored this point in their enforcement agenda.
The Press Release announcing this case states:
“The SEC’s order finds that Redman (the former CEO) caused ProPetro to incur $380,594 worth of personal and travel expenses unrelated to the performance of his duties as CEO. He also failed to disclose to company personnel that he had pledged all of his ProPetro stock in two private real estate transactions. During the same period, ProPetro failed to properly disclose $47,591 in additional, authorized perks it paid to Redman.”
As you can read in the related AAER, use of a company aircraft for personal trips and use of a company credit card for personal expenses were major parts of this case.
As is typical in these cases, ProPetro and Redman agreed to cease and desist from further violations, and the former CEO agreed to pay a $195,046 penalty. The order notes ProPetro’s significant cooperation with the agency’s investigation as well as its very extensive remedial efforts, including “hiring an entirely new management team with significant public company experience, hiring additional finance department personnel, installing several new directors, and developing new controls, policies, and procedures concerning perks.” The company did not pay a fine.
These steps go well beyond company actions and SEC’s sanctions in other cases, such as when Dow Chemical was required to hire an independent consultant to conduct a review of its policies, procedures, controls, and training relating to perks.
As always, your thoughts and comments are welcome!