McDonald’s (MCD) is being accused of fudging SEC documents by failing to report all of the perks of one of its executives. This has led the press and other observers to ask whether the practice is routine.
The SEC requires that all compensation of senior management be listed in proxies. This includes base pay, bonuses, stock options, and the most benign perks.
According to MarketWatch, “McDonald’s developed a complex scheme to keep country-club fees it paid for executive Tim Fenton out of the fast-food giant’s 2007 proxy statement, according to the civil complaint.” In an era where shareholders do not like to see payments for limousines, private jets, security guards, and personal grooming, country clubs are particularly hard to swallow. They are a symbol of the leisure time of the wealthy, and something that most shareholders cannot enjoy.
Fenton was paid almost $3.6 million last year, so shareholders might fairly ask why he does not cover his own expenses. But, the problem is much more serious than that. The SEC expects companies to put in every last detail on how senior managers are rewarded for their work. Breaking those rules is messing with federal regulations, something few companies want to be accused of and none want to be convicted of.
Fenton should have been paid in cheeseburgers.
Douglas A. McIntyre
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