The NASPP Blog

April 7, 2009

Would You Stand Up for Your Principles?

Broc Romanek’s blog on a recent lawsuit filed against McDonald’s caught my eye for its relevance to NASPP members. The former Senior Director of Compensation is suing over her termination, claiming that she was fired for questioning their executive compensation disclosures. The lawsuit alleges that McDonald’s made a number of misrepresentations in its disclosures.

Even White Collar Crime Can Be Interesting

Sure, it’s not quite as pulse-racing as, say, robbing a bank, but never-the-less, I find the details of lawsuits like this to be fascinating (for another lawsuit with a surprise twist, see the recent “In the Courts” column of this month’s issue of The NASPP Advisor) . According to the lawsuit, McDonald’s:

  • Set up a reimbursement/repayment scheme to avoid disclosing golf club memberships for a regional President stationed in Hong Kong;

  • Mislabeled the outgoing CEO as a “transitional officer” so he could keep his health and other benefits, and so the millions paid to him after his last day of work for McDonald’s could be called salary and incentive pay, rather than severance; and

  • Implemented a shareholder-mandated cap on executive severance agreements with loopholes large enough to render the cap meaningless.

I don’t know all the details of the reimbursement/repayment scheme and loopholes in severance cap sound a little run-of-the-mill, but the “transitional officer” label seems quite creative.

The plaintiff (the former Senior Director of Compensation) pushed back on the company’s decisions regarding the disclosures and, ultimately, refused to “sub-certify” them. The sub-certification apparently was required under the company’s SOX procedures. The lawsuit claims that, as a result, she was “isolated, ostracized and ultimately terminated.”

What Would You Do?

The title “Senior Director of Compensation” isn’t that far off from the title many NASPP members hold. This isn’t an isolated situation implicating only a high level executive; it is a scenario that many NASPP members could encounter in their own jobs.

When you see your employer doing something you feel is wrong, do you speak up? How far would you go if you had to? Would you use your company’s whistle-blower hotline? Would you sacrifice your job–especially in the current economy?

We’ll continue to follow this case and let you know how it turns out, maybe in a future “In the Courts” column in the Advisor.

NASPP Conference Hotel Announced
I’m pleased to announce that the 17th Annual NASPP Conference will be held from November 9-12 at the San Francisco Hilton. Reserve your room online or by calling (800) 445-8667 or (415) 771-1400.

Be sure to mention the National Association of Stock Plan Professionals Conference or group code SPP to obtain the Conference rate. If you have any difficulty securing a room, please contact us at naspp@naspp.com.

New Compliance-O-Meter Quiz on Evaluating Your Service Providers
This month’s Compliance-O-Meter focuses on evaluating your service providers.  Take five minutes (really, just five minutes!) to complete the quiz and see how you compare to your peers.

Reason #20 to Renew Your NASPP Membership:  Half-Off Restricted Stock Essentials
NASPP members that register by April 24 can save 50% off the NASPP’s pre-conference session, Restricted Stock Essentials.  With the market slump and the ARRA provisions relating to restricted stock, we predict that more and more companies will be implementing these plans. Make sure you’re ready with our one-day, intensive program covering all the nuts and bolts of administering restricted stock and unit plans. 

NASPP “To Do” List
We have so much going on here at the NASPP that it can be hard to keep track of it all, so I keep an ongoing “to do” list for you here in my blogs. 

– Barbara