The Mercedes S65 is the latest contra indicator…

May 20, 2008

While I’ve yet to see research on this, there simply has to be an inverse relationship between the number of club memberships and luxury cars an executive of a publicly traded company belongs to or drives and the stock’s performance. Vineyard National Bancorp (VNBC), which filed this 10-K yesterday, is simply the latest in a long line of companies to drive home that relationship.

Too bad, however, that Vineyard shareholders had no idea about the various memberships prior to yesterday’s filing, say, when the stock was trading at $25 instead of the under $3 it is today. In yesterday’s filing, the company disclosed that the company spent nearly $50K last year on three club memberships for former President and CEO Norman Morales, up from $41 K in 2006. Yesterday’s filing also noted that the company spent nearly $100K on Morales’ “automobile and gas allowance”, up from $28K the year before.

But there’s also a bit of palace intrigue here. Neither of those perks were disclosed in prior filings and you have to wonder whether the current events at Vineyard — Morales, who “stepped down” in January is teaming up with stockbroker Jon Salmanson to propose an alternative slate of directors and claimed victory last month on a consent solicitation — prompted Vineyard’s current slate of directors to come clean about the cost of Morales’ various perks, which according to this agreement include a 2007 Mercedes S65 and membership in the Shady Canyon Country Club. Because it simply seems like too much of a coincidence for Vineyard to ‘fess up to this now.

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