“Airing Out the Denny Crane Room”: Recent SEC Action Emphasizes Need for Effective Disclosure Controls and Procedures for Executive Perquisites

Last month, Energy XXI, Ltd. (“EXXI”), a publicly-traded oil and gas exploration company, saw its former Chief Executive Officer charged with various securities law violations by the Securities and Exchange Commission (“SEC”). The SEC seeks to have the CEO pay civil money penalties and be barred from any officer or director role with any issuer of registered securities. From 2012 to 2016, “[the CEO] obtained undisclosed compensation and perquisites by submitting business expenses for payment that he knew or should have known were personal in nature and/or lacked documentation sufficient to establish a business purpose.”[1] This resulted in a failure by EXXI to disclose more than $1 million in compensation and perquisites in its executive compensation disclosures.[2] Part of the CEO’s problematic practices included charging to his corporate credit card over $1 million in expenses that were either personal in nature and/or lacked…

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