Two gold stars!

January 5, 2007

goldstar.jpegMost weeks, it’s hard enough to find one company that’s worthy of a rare footnoted.org gold star. Indeed, after 3 1/2 years of blogging, we’ve only handed out 30 gold stars. But this week, we’re handing out two.

To be fair, this 8-K filed by E*Trade Financial (ETFC) was filed late last Friday, so technically it was a 2006 filing. As footnoted.org regulars know, anything filed late on a Friday, particularly before a holiday weekend, usually means that the company is trying to bury something. But in the filing, E*Trade said that its compensation committee had decided to eliminate the tax gross-up that executives would receive following a change-in-control both in 2007 and in all years going forward. That’s definitely worth a gold star.

Footnoted.org’s position on tax gross-ups should be well known: they’re pretty gross. If you happen to make a lot of money through a merger or some other event, you ought to be able to afford some skilled legal/accounting talent to help you minimize the tax burden. Companies that provide these gross-ups are simply enabling greed by removing a key incentive to donate to non-profits and charitable causes as a way to minimize a hefty tax bill.

The second gold star goes to Keithley Instruments (KEI) which filed its proxy yesterday. Like many companies, Keithley is in the midst of the stock options backdating mess. In the compensation committee report, the committee said that as a result of the “costs and management time incurred by the company” on the back-dating investigation, neither Chairman and CEO Joseph Keithley nor CFO Mark Plush would receive a 2006 bonus or a salary increase and options for 2007. Thanks to a reader for pointing out this change — we can only read so many filings and things are bound to slip through the cracks.

One can only hope that two gold stars on the first Friday of 2007 is a positive sign of things to come!

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