Here's a great story about one of my favorite corporate governance outhouses, Reddy Ice (NYSE: FRZ).Yesterday, the company announced that it had hired a new chief operating officer. Then, in a stunning display of corporate spin, the company buried this bombshell at the bottom of the 8-K disclosing the new COO:
Effective September 13, 2008, Ben D. Key, the Company's Executive Vice President - Sales & Marketing, has been placed on a paid leave of absence and relieved of his duties at the direction of the Special Committee of the Company's Board of Directors (the "Committee"). The Committee found that Mr. Key has likely violated Company policies and is associated with matters that are under investigation. The Committee's investigation is ongoing and no conclusions have been reached that any illegal conduct occurred. Further action may be taken by the Committee prior to or following the conclusion of its investigation.
That'll teach him! Violate company policies? You're going on a paid vacation! The move is believed to be related to an investigation by federal prosecutors and attorneys general in 19 states into alleged price fixing. The company also announced that it was suspending its dividend, and the stock closed down nearly 14% on Monday.
Obviously that's a lot of bad news for one day but what's most troubling to me is the company's efforts to bury bad news in regulatory filings.
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