May 12, 2015
The SEC’s Perks Cases: What to Do Now
– Broc Romanek, CompensationStandards.com
Recently, I blogged about the Polycom enforcement action brought by the SEC. The former CEO falsified expense reports – and the company was charged with inadequate proxy disclosure and improper internal controls. These perks-related cases are infrequent – but I also note that most of the SEC’s enforcement cases over executive compensation involve perks somehow (here’s the list of SEC enforcement cases – here’s memos on the Polycom action).
We have this checklist about CEO expense approvals. In addition, this blog by David Smyth has these steps you can take to reduce your risks in this area – including this excerpt:
1. Require a specific reason for each reimbursement request (see flights above). My assistant has to remind me of this for mine every time, but it’s not onerous; it’s reasonable and necessary.
2. Do not allow anyone to approve his own expenses (see P-card nonsense above).
3. Give extra attention to extra-large expenses. You needn’t comply yourself into bankruptcy, but if someone is buying over $10,000 in clothes, consider asking what and who they’re for. It should be an easy answer to get. If it’s not, you may have stumbled into a problem that needs fixing.