TheCorporateCounsel.net

After I blogged about the SEC’s position on expenditures for executive security being regarded as a perk, a member reached out with an anecdote about an interesting – and troubling – real world scenario where this issue came up:

Some years ago, one of my former firm’s clients was a major defense contractor, and had been advised by the US Government that because of known threats, certain security-related items should be installed at the CEO’s residence. The SEC staff insisted that the costs needed to be disclosed as perquisites, to which we relented. One of our concerns was that because other senior executives did not have comparable security coverage, we were letting the bad guys know where the systemic vulnerabilities might be. This continues to be an issue. When it comes to matters of national security, I disagree with the staff position.

In light of the SEC’s position, companies thinking about implementing or upgrading security arrangements for their executives should consider whether casting a wider net may be necessary in order to avoid disclosure that inadvertently reveals – or creates – security vulnerabilities.

– John Jenkins