Coming out in the wash…

January 29, 2004

You have to wonder why it’s taken Arriba (ARBA) , a former high-flying tech stock whose shares once traded at around $200, so long to describe an unusual loan arrangement between its former Chairman and its current Chief Executive. The company’s latest attempt at describing the deal — in an amended 10-K filed yesterday — notes that Arriba is required to make annual payments to CEO Robert Calderoni to cover income tax payments related to the forgiveness of the $4 million loan by an entity affiliated with former Chairman Keith Krach. In fiscal 2003, that added up to $1.17 million. The loan appears to date back to 2001, and Arriba’s disclosure on it up until now has been sketchy at best. In the amended K, Arriba also describes additional loan forgiveness to two other executive officers, including its CFO. That one also dates back to 2001, though in the past, including an amended K the company filed in early January, Arriba simply described it as a loan to an executive officer. Such loans — and the forgiveness that went along with them — used to be a lot more common. But under Sarbanes-Oxley, they’re now forbidden.

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