Revisiting expenses at InfoGroup…

While there aren’t a lot of hard and fast rules for mining SEC filings for interesting nuggets, it’s a pretty safe bet that if the words “company yacht” are mentioned in the filing, it’s worth at least a quick skim.

Late yesterday, InfoGroup (IUSA) (formerly known as infoUSA) a company that we’ve footnoted in the past and which has attracted more than its share of less-than-favorable headlines due to former CEO Vinod Gupta’s ties to Bill and Hillary Clinton (see here and here) filed an amended 10-K.

The purpose? To restate some expenses that the company had previously disclosed in relation to Gupta. The review was related to a two-year old SEC investigation which InfoGroup announced on Oct. 20 had been “settled in principle”. Here’s a key sentence from yesterday’s filing: “On completion of the analysis, the Company concluded based on new methodology…that there were more personal benefits to Mr. Gupta than had been previously concluded for fiscal years 2003 through 2008.”

How much more? A lot more. Take the company yacht, for example. In 2008, the company reported no personal benefit — that’s zero — to Gupta for use of the company yacht. In the revised filing, the number was listed as $873,078! In 2007, that expense was listed as $5,836. The actual number per yesterday’s filing? $770,433. The yacht — remember this company is based in land-locked Omaha, so there’s also the question of getting to the yacht first since we don’t think it was sailing on the Missouri — isn’t the only oops. In 2006, the company reported Gupta’s personal jet usage to be $125,708. Yesterday, that number was revised to $460,950, or nearly three times as much. Expense reimbursements to Gupta were also vastly understated in the original filing: just $156,682 in 2007. Under the “new math” that number blossomed to $368,309.

What’s interesting here — at least to us — is how the numbers all boil down to what’s considered a business expense and what’s a personal benefit, or a perk. It’s a fine line that many companies walk and it’s one of the reasons why the numbers in almost all proxy statements need to be taken with a huge grain of salt. In yesterday’s filing, the company notes that “Mr. Gupta believes that the Company has included in this category expenses that were reasonable business expenses and that were integrally and directly related to the performance of his executive duties and/or did not provide any personal benefit to him.”

Call us cynics, but we’re quite confident that Gupta isn’t the only CEO of a publicly traded company who has tried to make that argument. We only wish we were privy to more of these “That was for an important business meeting in St. Barts” conversations between the CEO and the person in accounting who’s actually responsible for making sure the expense looks legitimate.

Correction: An earlier version of this post used InfoGroup’s former name, InfoUSA. Thanks to the folks at for correcting my error.