{"id":2690,"date":"2023-08-16T15:03:45","date_gmt":"2023-08-16T19:03:45","guid":{"rendered":"https:\/\/seci.wpenginepowered.com\/?p=2690"},"modified":"2023-08-16T15:03:49","modified_gmt":"2023-08-16T19:03:49","slug":"the-enforcement-divisions-perks-focus-continues","status":"publish","type":"post","link":"https:\/\/seciblog.pli.edu\/index.php\/the-enforcement-divisions-perks-focus-continues\/","title":{"rendered":"The Enforcement Division\u2019s Perks Focus Continues"},"content":{"rendered":"

On June 20, 2023, the SEC Enforcement Division announced<\/a> the latest in a continuing series<\/a> of perks-focused enforcement cases.\u00a0 This latest case involved Stanley Black and Decker, Inc. (SBD) and a former company officer, Jeffrey Ansell.<\/p>\n

According to the SEC\u2019s Order<\/a>, SBD failed to disclose \u201cat least $1.3 million\u201d in perks paid to four named executive officers and one director.\u00a0 These perks related primarily to the use of the company aircraft.<\/p>\n

Ansell, who had been Executive Vice President of SBD and President of SBD\u2019s Tools & Storage segment, \u201creceived undisclosed compensation that consisted, in part, of $280,000 in personal expenses he charged to the company,\u201d according to the SEC Press Release<\/a>.<\/p>\n

In an example of how cooperation with the SEC can impact on the enforcement process, the SEC did not impose a civil penalty against SBD. \u00a0As you can read in the Order<\/a>, SBD\u2019s cooperation was extensive.\u00a0 It included a special investigation by outside counsel under the oversight of a Special Committee of independent directors, prompt self-reporting, extensive cooperation with the Enforcement Division, and prompt remedial actions and public reporting of the misstatement.\u00a0 In addition, based on the company\u2019s self-reporting, cooperation, and remediation, the SEC did not bring any charges against the company because of Ansell\u2019s conduct.<\/p>\n

Gurbir S. Grewal, Director\u00a0of the Enforcement Division, made this comment in the Press Release<\/a> announcing the action:<\/p>\n

\u201cToday\u2019s action not only reaffirms the Commission\u2019s commitment to enforcing\u00a0executive compensation disclosure rules, but also to incentivizing self-reporting and cooperation when entities and individuals discover violations of the federal securities laws.\u201d<\/p>\n

Ansell paid a $75,000 civil money penalty.<\/p>\n

Many perks enforcement cases find that companies do not use the appropriate definitions and processes to determine perks.\u00a0 The SEC\u2019s Order (with a bit of a call back to the Dow case<\/a>), quotes the Adopting Release<\/a>that enacted the current requirements for perks disclosure:<\/p>\n

\u201c\u2026an item is not a perquisite or personal benefit,\u201d and does not need to be reported, \u201cif it is integrally and directly related to the performance of the executive\u2019s duties. Otherwise, an item is a perquisite or personal benefit if it confers a direct or indirect benefit that has a personal aspect, without regard to whether it may be provided for some business reason or for the convenience of the company, unless it is generally available on a non-discriminatory basis to all employees.\u201d<\/p>\n

The SEC\u2019s Order<\/a> draws from the Adopting Release<\/a> stating:<\/p>\n

\u201c\u2026the concept of a benefit that is \u2018integrally and directly related\u2019 to job performance is a narrow one,\u201d which \u201cdraws a critical distinction between an item that a company provides because the executive needs it to do the job, making it integrally and directly related to the performance of duties, and an item provided for some other reason, even where that other reason can involve both company benefit and personal benefit.\u201d<\/p>\n

Again, from the SEC\u2019s Order<\/a>, even where the company:<\/p>\n

\u201c\u2026has determined that an expense is an \u2018ordinary\u2019 or \u2018necessary\u2019 business expense for tax or other purposes or that an expense is for the benefit or convenience of the company,\u201d that determination \u201cis not responsive to the inquiry as to whether the expense provides a perquisite or other personal benefit for disclosure purposes.\u201d Indeed, \u201cbusiness purpose or convenience does not affect the characterization of an item as a perquisite or personal benefit where it is not integrally and directly related to the performance by the executive of his or her job.\u201d<\/p>\n

As always, your thoughts and comments are welcome!<\/p>\n","protected":false},"excerpt":{"rendered":"

On June 20, 2023, the SEC Enforcement Division announced the latest in a continuing series of perks-focused enforcement cases.\u00a0 This latest case involved Stanley Black and Decker, Inc. (SBD) and a former company officer, Jeffrey Ansell. According to the SEC\u2019s Order, SBD failed to disclose \u201cat least $1.3 million\u201d in perks paid to four named … Continue reading The Enforcement Division\u2019s Perks Focus Continues<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_wpas_customize_per_network":false},"categories":[143],"tags":[],"coauthors":[154],"class_list":["post-2690","post","type-post","status-publish","format-standard","hentry","category-hot-topic"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/posts\/2690","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/comments?post=2690"}],"version-history":[{"count":0,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/posts\/2690\/revisions"}],"wp:attachment":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/media?parent=2690"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/categories?post=2690"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/tags?post=2690"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/coauthors?post=2690"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}