Shortly after his favorable 2014 mid-year review, the whistleblower raised concerns to his managers, to the company’s internal complaint hotline, and to the SEC that IGT’s publicly-reported financial statements may have been misstated due to IGT’s cost accounting model relating to its used parts business. As part of the whistleblower’s job function, he had been tasked with evaluating the pricing methodology for used parts used by IGT, but he did not oversee the company’s accounting functions.
IGT conducted an internal investigation with the assistance of outside counsel and determined that its reported financial statements contained no misstatements. Approximately three months after the whistleblower raised his concerns, IGT terminated him.
The SEC did not appear to find fault with the company’s accounting, so the proceeding underscores the fact that a whistleblower doesn’t have to be right to be protected.
As this Orrick memo notes, the SEC also tagged AB Inbev last week for confidentiality language in a separation agreement that did not contain a carve-out for SEC communications. The SEC believed that the absence of this language in the confidentiality provision impeded the whistleblower from communicating directly with it.
Webcast: “Board Refreshment & Recruitment”
Board diversity will be one among many topics during tomorrow’s webcast – “Board Refreshment & Recruitment” – featuring Wilson Sonsini’s Lydia Beebe, Davis Polk’s Ning Chiu, Spencer Stuart’s Julie Daum, South Jersey Industries’ Gina Merritt-Epps and Global Governance Consulting’s Susan Wolf analyze the latest director recruitment and board evaluation practices. The webcast topics include:
1. When & how should boards be planning for succession in advance of any vacancies
2. What are investors looking for in terms of board refreshment
3. Should retirement age/ term limits be used as tools to help the process
4. What skills are boards looking for as they recruit new members
5. How does the increasing push for diverse boards play into recruitment – what is the controversy over diversity disclosure
6. What roles do director evaluations play in board refreshment processes and what are some of the leading practices (3rd party vs. peer evals, etc.)
Our October Eminders is Posted!
– John Jenkins