A CEO packs his board with cronies, uses corporate dollars toward things like a yacht and allows his company to do business with others he owns. His punishment: Keeping his job. This isn't a flashback to the start of this decade when such nonsense prevailed. Back then, badly behaving executives were shown the door. But a special board committee investigating InfoGroup's expenses apparently missed that message. It still decided to keep founder Vin Gupta around, ceremoniously stripping him of his chairman's title yet allowing him to hold on to the top executive's job. It's a go-figure moment in the corporate world. The global financial crisis _ while far removed from InfoGroup _ has put executives and directors everywhere on notice; their actions are under close scrutiny by an unnerved investing public. This was an opportunity for InfoGroup to stand out from the crowd. It looked like it was on track to do that when it announced last December it had formed a committee to probe expenses at the Omaha, Neb.-based company. Shareholders had been barking for a few years about Gupta's influence and spending at the company, which he founded in 1972 and currently owns a 40 percent stake. They called into question his ties to some board members and businesses. They alleged the company misspent million of dollars, some of it on Bill and Hillary Clinton _ including a $3.3 million consulting contract for the former U.S. president. They claimed InfoGroup had made sizable payments to a company Gupta owned called Annapurna Corp. for use of a jet plane, an 80-foot yacht, condos in Hawaii and California and a University of Nebraska stadium box. Troubled investors also questioned his intentions. In one instance in 2005, they noted, Gupta had told shareholders he thought the stock was worth $18 a share but just a few months later, he tried to buy the company for $11.75 a share. The board didn't let that deal go through, but it also didn't pursue other takeover bids. Investment manager Cardinal Value Equity Partners and hedge fund Dolphin Limited Partnership sued the company last year, and the Securities and Exchange Commission began an informal investigation. The company, then known as InfoUSA, added new members to its board, and named the investigating litigation committee. The results of that probe were released late Tuesday and further detailed in a securities filing Wednesday morning. No fraud was found. Gupta will repay the company $9 million over the next five years, subject to court approval as part of a future settlement agreement with shareholders who sued the company. Neither that lawsuit nor the SEC investigation has been resolved, though the company said in its securities filing that the investigating committee was cooperating with the SEC. The CEO also agreed to not buy additional InfoGroup stock through next July. His family members _ or any directors or executives' relatives _ aren't permitted to do businesses with the company valued at $120,000 or more without audit committee approval. The yacht will be sold, and not replaced. Going forward, the general counsel has to sign off on any consulting agreements, charitable contributions, purchases or leasing of planes or cars, mortgage or rental payments, and club membership fees. Continued... |