This just in from the SEC website: the commission is charging infoGROUP’s former CEO, two other execs, and audit committee chair “for their roles in a scheme in which the CEO funneled illegal compensation to himself in the form of perks worth millions of dollars. The SEC alleges that Vinod Gupta, the former CEO and Chairman of infoUSA Inc. and infoGROUP Inc. (Info), fraudulently used corporate funds to pay almost $9.5 million in personal expenses to support his lavish lifestyle. He additionally caused the company to enter into $9.3 million of undisclosed business transactions between Info and other companies in which he had a personal stake.”
We can’t say we’re entirely surprised. Last December, The Corporate Library’s ratings analyst reviewing the company raised concerns about the perksand other compensation practices that were out there in plain sight. Gupta resigned in 2008 and got a $10 million severance, which represented more than 20 times his base salary and seemed excessive since he continued to own more than a third of the company. About perks, our analyst wrote: “The CEO’s ‘all other compensation’ includes perks such as company automobile ($27,150), company aircraft ($181,629), and club membership ($31,656), expense reimbursement (62,537), personnel service ($68,019), home office allowance ($64,000), and pension contributions ($6,900). Especially concerning is the expense reimbursement which represents payments by the company for expenses charged by Mr. Gupta to various credit cards, for which, after review, ‘the company was unable to identify adequate support to conclude that the expenditures were integrally and directly related to the performance of Mr. Gupta’s duties.’ (Purchase our complete corporate governance profile for infoGroup Inc. here) However, the CEO determined that these were reasonable business expenses.” Apparently the SEC begs to differ.
Kimberly Gladman - Director of Research and Risk Analytics
