Review Notes, Volume 1: D&O Changes

Note: This post has been edited from a previous version.

At Audit Analytics, we review hundreds of thousands of filings per year. In the course of those reviews, we come across typos, communications apparently not meant for public disclosure, and filings that are just plain odd.

In this blog, we thought we’d share some examples from our Director & Officer Changes database.

On November 27, 2015, CorGreen Technologies filed an 8-K to report the resignation of their CFO effective April 22, 2015. The first odd thing about this is that the 8-K was filed in November, seven months after the effective date of the departure. According to the instructions on Form 8-K, D&O disclosures are supposed to be made within four days (section B.1). Second, a Notification of Late Filing was signed by the same CFO on May 15, a few weeks after the disclosed effective date. So when did the CFO actually resign? The subsequent 10-Q for the quarter ended 3/31/15 was signed on October 23 by a new CFO.

Similarly, we came across an 8-K dated October 20, 2015, which was signed on that date by the Chief Executive Officer… the same CEO who, in that same filing, reported having resigned four days earlier on October 16, 2015.

In a different scenario, on December 21, 2015, the Board of Directors of Timberline Resources received a letter of resignation from its Chief Executive Officer and President. According to the proxy, the resignation was pursuant to “good reason” as set forth in the CEO’s employment agreement. So far so good, except that the letter of resignation referenced in the proxy was not attached as an exhibit, which is required according to the Form 8-K instructions (Item 5.02, (a)(2)).

This next one is a little more alarming. On October 20, 2015, the CEO, President, and Sole Director of a food company submitted a letter of resignation. The letter indicated that the resignation was due in part to “serious concerns that the financial records were correct.” The 8-K was filed on December 14, 2015, almost two months after the date of the resignation letter. But filing this 8-K on time might not have been a top priority, since the company still hasn’t filed a 10-K for fiscal 2014.

Let’s turn to Simmons First National Corp to leave us on a good note. Upon his retirement, after serving in various executive capacities for the company and its subsidiaries since 2004, the outgoing President’s separation agreement included a rather nice perk: payment of dues to a country club of his choice for one year, to go along with substantial other awards.

With filing season quickly approaching, you can be sure that we will have our eye out for more unusual filings. Stay tuned for Volume 2!

Audit Analytics tracks Director and Officer changes with the ability to create daily email alerts. You can call us at (508) 476-7007 or e-mail to learn more about this data set.