April 29, 2005
SEC Sues Tyson Foods Over Perk Disclosures
Yesterday. the SEC charged Tyson Foods with inadequate proxy disclosures as well as with failing to maintain adequate internal controls in connection with its former Chair’s perks. The company settled by paying a $1.5 million civil fine – and the former Chair, Don Tyson, will pay an additional $700k since he caused and aided the company’s violations of disclosure rules for benefits that he, his friends and family members received while he was Chair and after his retirement in October 2001. Mr. Tyson is still a consultant to the company and sits on its board.
Reading through the list of perks that Mr. Tyson received, you can understand why companies might be loathe to disclose the perks that their senior managers receive. There is some incredible stuff disclosed in this press release: from $80,000 in lawn maintenance fees and $200,000 in housekeeping fees – to $1 million to cover the personal income tax liability associated with his receipt of the numerous benefits!
One aspect of the SEC’s order that Mark Borges blogged about yesterday was that the SEC found that the company’s use of the phrase “travel and entertainment” misleading to describe the continuation of Mr. Tyson’s perquisites under his retirement agreement. To Mark and me, this really underscores one of the conclusions from the earlier GE enforcement proceeding: executive perks have to be described with sufficient specificity so that shareholders can understand the nature and scope of these benefits.
In the May/June issue of The Corporate Counsel – which will be mailed in early June – there will extensive analysis of perk use and disclosures.
FASB Proposes New GAAP Hierarchy
Good for both accountants and us lawyers alike – in connection with its effort to improve the quality of financial accounting standards and the standard-setting process – the FASB yesterday published an exposure draft on “The Hierarchy of Generally Accepted Accounting Principles.”
The GAAP hierarchy, which currently resides in the AICPA’s Standard No. 69, ranks the relative authority of accounting principles issued from multiple standard-setters. The FASB’s codification and retrieval project will integrate existing US GAAP into a single authoritative retrievable source, thereby creating a single authoritative codification of GAAP.
Remember that we have a set of FAQs that explains all the basics of accounting and auditing in our “Accounting Overview” Practice Area.
My Beef with the DC Bar
Just finished reading an article in the Legal Times about how eight former DC Bar Presidents – including former Deputy Attorney General Jamie Gorelick – filed an amicus brief supporting a DC Bar member (who is a senior DOJ staffer) that was suspended from the Bar for not paying his dues. The brief was filed because the DC Bar is essentially saying he can’t rejoin the bar – even though he wants to pay what he retroactively owes – due to an arcane DC Bar rule.
The DC Bar’s GC doesn’t sound responsive as he is quoted is saying, “It is a mandatory bar, not a club” and explains how the rules limit retroactive reinstatement only where the DC bar makes a mistake. Got news for the GC – his staff made a mistake with my membership last year and they still refuse to acknowledge it despite multiple appeals. It is the most rigid organization I have ever dealt with – so I am glad to see this article and know I ain’t crazy. Trust me, the members don’t come first with the DC Bar!
Note that the senior DOJ staffer has a more complex situation, as he is being sued for malpractice as he has been trying cases for two years without a license in DC. Me? I just sit in my home office in pajamas and post stuff on websites all day – so I really don’t need to give my money to the DC Bar anyways. As you probably can tell, I had to get that off my chest…