On August 4, 2021, the U.S. Securities and Exchange Commission (SEC or Commission) announced settled charges against National Beverage Corp. (NBC) relating to NBC’s failure to disclose executive perquisites provided to its CEO.1 The SEC’s fifth perquisite case in a little over a year, this settlement signals the Commission’s continued focus on undisclosed perks, a priority articulated in 2020.
In National Beverage Corp., the SEC charged NBC with failure to evaluate and disclose executive perquisites granted to its CEO. According to the settlement, NBC’s CEO took 33 trips between 2016 and 2020 that were financed by NBC but not “integrally and directly related to the CEO’s job duties.” NBC failed to disclose the cost of these trips in its proxy statements and Forms 10-K, resulting in understated CEO compensation of approximately $1.5 million between fiscal years 2016 and 2020. The SEC determined that this failure stemmed from NBC’s inadequate controls relating to perquisite disclosures, noting that NBC did not analyze whether the CEO’s flights were directly related to his duties, nor did NBC provide adequate training to employees tasked with drafting the executive compensation sections of NBC’s proxy statements. As a result, the SEC found that NBC violated Sections 13(a) and 14(a) of the Exchange Act and Exchange Act Rules 13a-15(a), 13a-1, 12(b)-20, 14a-3, and 14a-9.2 NBC agreed to a civil penalty of $481,000 to settle the SEC’s charges.3
Sidley Austin LLP provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice or to create a lawyer-client relationship.
Attorney Advertising - For purposes of compliance with New York State Bar rules, our headquarters are Sidley Austin LLP, 787 Seventh Avenue, New York, NY 10019, 212.839.5300; One South Dearborn, Chicago, IL 60603, 312.853.7000; and 1501 K Street, N.W., Washington, D.C. 20005, 202.736.8000.