(Commentary by Brian Tayan, Stanford Corporate Governance Research Program, MBA ’03)
Source: Point Blank Solutions, Form 10-K, Filed October 1, 2007
In fiscal 2006, David H. Brooks, chairman and CEO of Point Blank Solutions, received $468,750 in total compensation. According to the company’s proxy, Brooks’ pay consisted entirely of salary, with $0 listed for bonus, options, and all other compensation. These amounts, however, came with a caveat that was explained in a footnote disclosure:
“We made numerous payments that appear to be personal expenses, or for which we cannot verify a business purpose. These payments include:
a. Approximately $200,000 for the purchase of a Bentley Flying Spur in 2006, which was included on our fixed asset register and operated by Mr. Brooks. […]
b. Approximately $299,000 for payments […] related to private jet travel by Mr. Brooks in 2006.
c. Approximately $175,000 for payments made to an affiliated company of Mr. Brooks, which owns a residence in south Florida in 2006.
d. The value, for which we have not been able to quantify the cost, of Mr. Brooks’ personal use […] of a Madison Square Garden skybox in our name that was controlled by Mr. Brooks.
e. Payments totaling approximately $62,000 made in 2006 to […] numerous payees which appear to be personal in nature.”
Following an investigation by the SEC and U.S. Attorney’s Office, Brooks and several other senior officers were terminated.