Florida firefighters take on Ralph Lauren…
Over the years, we’ve picked on Ralph Lauren (RL) a bit as we’ve found various examples of excess in the company’s filings. (See here for a car valued at $67,500 that was transferred to Ralph Lauren’s brother). And that’s just one example. Pretty much every one of their proxies has had a few pearls worth poking at (see here for one we found all the way back in 2006).
Like a number of public companies that have evolved from personal brands (Martha Stewart (MSO) and Steve Madden (SHOO), which Sonya footnoted last month are two that come immediately to mind), there’s a certain amount of — how can we put this politely? — co-mingling between the personal and the corporate that strikes us as a bit incestuous, not to mention downright tacky.
Despite this, Ralph Lauren stock has been on something of a tear, rising over 35% over the past year. That kind of performance often prompts investors to turn the other cheek when it comes to the type of largesse we’ve documented at the company over the years.
Until now, that is. In the 10-Q that Ralph Lauren filed earlier this week, it noted that the City Pension Fund for Firefighters and Police in Pembroke Pines, Fl. (motto: to Protect and Serve Your Retirement) has filed a suit in New York State Supreme Court against the company’s directors and certain executives for “waste of corporate assets by the Company’s directors for permitting excessive compensation to, and alleged related party transactions with, the Company’s Chairman and Chief Executive Officer and certain other executives, and unjust enrichment by these executives”. The filing goes on to note that:
The Plaintiff seeks damages on behalf of the Company in an unspecified amount sustained from the alleged breaches of fiduciary duty and waste of corporate assets and seeks disgorgement of excessive compensation and benefits of related party transactions. The Plaintiff also demands it be awarded the costs and disbursements of the derivative action, including reasonable attorneys— fees.
The lawsuit was filed in November and was picked up at the time by Courthouse News Service, which monitors courts for news-worthy suits. But this is the first time that this is appearing in any of Ralph Lauren’s filings. In the 10-Q, the company doesn’t give an estimate for damages and says the company and the defendants sought dismissal of the case on Jan. 12.
While there’s no discussion in the filing on who’s footing the bill for fighting this lawsuit, the company does note in a different section of the filing that its SG&A expenses climbed by over 15%. While legal fees are not specifically broken down, the filing does make clear that they’re included in this number.
Given the heady performance of the stock, other investors may be more than happy to sit on the sidelines and see whether the Florida firemen and police or the Bronx prepster ultimately prevail.
Over at footnotedPro, we’ve put out four reports in the past week. We’re at the beginning of filing season and the actionable disclosures are coming in fast and furious. For more information or to inquire about a trial subscription, contact us. Find out what you’re missing in the filings.