Groupon’s Friday Night Dump blooper

December 16, 2013

We’re always amazed at what we find in the weekly Friday Night Dump, that golden period on Friday evenings after the markets close, but the SEC remains open.. Much of what we find, we only share with subscribers to our premium service.

But we wanted to share this amended 8-K filed by Groupon after 5 pm on Friday. In it, the company corrected a mistake that it made nearly a year earlier, when it filed this 8-K outlining long-term equity awards, in the form of RSUs, to four of its top executives.

The biggest RSU award granted on Jan. 28, 2013 was to COO Kal Raman, who received 1.2 million shares. Coincidentally, 25% of those shares vested yesterday, which is probably what prompted the Friday night filing. With Groupon stock having doubled over the past year, we’re guessing that at least some of those RSUs will be cashed in.

However, as the amended filing notes, Groupon (or most likely their outside counsel) recently realized that the 1.2 million shares that were granted exceeded the limits under the 2011 Incentive Plan they were granted under. Under that plan, the maximum award available to one person in any calendar year is 1 million shares. So Raman had to give back 200,000 shares. Indeed, shortly before the amended 8-K was filed, Groupon filed this amended Form 4 to document the change.

Maybe this seems like too much inside baseball stuff, but to us this seems like a pretty big oops. After all, didn’t someone — anyone — check the limits of the plan before offering the 1.2 million RSUs up to Raman? We went looking for the plan after Friday’s filing and found it attached to an S-1/A filed on Sept. 28, 2011. While the item was on pg. 6 of a 14-page document, it wasn’t that hard to find. It also strikes us as odd that it took nearly a year for someone at Groupon to “discover” the error.

What really strikes us, though, is how rare this sort of thing is. We went looking for other examples at other companies over $1 billion in market cap over the past year and came up empty, which probably explains why it was filed late on a Friday.

 

 

Posted in: Disclosures, Friday Night Dump

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Companies Mentioned: Groupon, Inc.,
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