Skechers USA’s top executives reportedly bilked the footwear maker of millions of dollars by boarding corporate jets for personal outings to vacation hot spots like Fiji, Bora Bora and Hawaii — and company directors did nothing to stop them. Did.
Thank you for reading this post, don't forget to subscribe!The allegations are at the center of a lawsuit in Delaware Chancery Court against Chief Executive Officer Robert Greenberg and his two sons — who also serve as Skechers executives. Melinda Nicholson, a Louisiana-based attorney for the shareholder who filed the lawsuit, told a judge Thursday that directors made no effort to place reasonable limits on executives’ personal use of company assets.
Nicholson told Judge Morgan Zurn that the executives took the trips on a pair of twin-engine, eight-seat Bombardier Global Express jets, an exemption granted under the managers’ compensation plan. Investors said the planes cost more than $4,000 per hour to operate.
During a hearing on whether the case should be thrown out, Nicholson told Zurn, “His personal use of the planes was too much.” Skechers directors dispute that non-business trips to luxurious locations such as the South of France, the Seychelles, Los Cabos and the Bahamas violated the terms of the executives’ compensation packages.
The challenge for Skechers’ jet perk comes as researchers found that CEOs of large public companies earned an average of $18.8 million last year — a 21% increase from the previous year, at a time when the S&P 500 index is down 20%. Was. This means that CEOs of S&P 500 companies received an average salary of 324 times more than regular employees.
Skechers’ proxy filings show Greenberg will receive $22 million in executive compensation in 2022, while his son Michael collected $15.4 million. Greenberg’s other family members on the company’s payroll collectively earned $12.3 million. Some of that compensation came in the form of personal use of company airplanes, according to the filing.
According to court filings, investors calculated that 56% of one of the Bombardier jets’ 2020 flight time was for personal use, while 64% of the other plane’s time was used for personal flights over the next year. Nicholson said the private travel of Skechers executives on corporate jets exceeds similar travel by their counterparts at companies such as Apple Inc., Johnson & Johnson and ExxonMobil Corp.
According to court filings, Skechers executives spent $139,000 to $1.1 million on each individual trip over the years. Most similar companies keep jet usage well below those levels, and the average among S&P 500 executives was about $54,000 in 2015, according to the filing.
“The failure of Skechers’ directors to monitor the perks cost the company a lot of money,” Nicholson said.
The directors’ attorneys argued that the Greenbergs’ aircraft use was part of their compensation package, which allows fair use of the jet for personal trips.
John Gildersleeve, an attorney representing the directors, said “Plaintiffs cannot legitimately claim a failure of oversight” because board members did not take steps to limit the executives’ contractual rights. “This was not an example of wasting corporate resources.”
Zurn said she would rule later on whether the investors’ case can proceed. He cast doubt on claims that board members failed in their oversight duty. “It troubles me to be asked to hold directors accountable simply because they may have decided to do nothing,” the judge said.
Source: fortune.com
