Dive Brief:
- The Securities and Exchange Commission (SEC) levied a $900,000 fine on Bermuda-based insurance company Argo Group International Holdings, Ltd. for failing to fully disclose perquisites and benefits provided to its former CEO, Mark Watson III.
- In its proxy statements for 2014 through 2018, Argo disclosed it had provided $1.2 million in perquisites and personal benefits, chiefly retirement and financial planning benefits, to its then CEO. In fact, it had paid more than $5.3 million on the CEO's behalf, including in filings for 2018 after a shareholder issued a press release alleging undisclosed perks to the CEO, the SEC says.
- As a result, the company understated perks and personal benefits paid to the CEO over this period by more than $1 million per year, or 400%. The CEO resigned in November 2019.
Dive Insight:
"Even after being made aware of potential inaccuracies in its disclosures related to executive compensation, Argo did not accurately and adequately inform shareholders about the perks and benefits it provided its highest-ranking executive over a five-year period," Kelly Gibson, director of the SEC’s Philadelphia Regional Office, said.
"We continue to focus on whether companies are fully disclosing compensation paid to their top executives and have appropriate internal controls in place to ensure that shareholders receive information to which they are entitled," Gibson said.
The perks Argo paid for, but did not disclose, included personal use of corporate aircraft, helicopter trips and other personal travel, housing costs, transportation for family members, personal services, club memberships, and tickets and transportation to entertainment events, the SEC says.
The SEC's order charges Argo with violating federal securities law provisions concerning proxy solicitation, reporting, books and records, and internal controls.
Without admitting to or denying the SEC’s findings, Argo obeyed the SEC's cease-and-desist order, which carries a $900,000 civil penalty.
