The Walt Disney Co. agreed Monday to settle Securities and Exchange Commission allegations that it failed to disclose benefits received by some directors and their relatives, including three children employed by the company, AP reported.
Disney was not fined, and it neither admitted nor denied wrongdoing, but the company agreed to refrain from future violations of securities laws, according to AP.
According to the SEC, between 1999-2001, Disney failed to disclose transactions benefiting directors and their families, which it was legally required to do in proxy statements distributed to shareholders and annual reports filed with the SEC.
Among transactions the company did not report, according to AP:
• It employed three children of directors, who received annual compensation ranging from $60,000 to more than $150,000;
• The spouse of another director was employed by a subsidiary that is one-half-owned by Disney and received compensation of more than $1 million per year;
• It made regular payments to a company owned by a Disney director that provided air transportation to that director for Disney-related business purposes; and
• It provided office space, secretarial services, a leased car and a driver to another Disney director, estimated to be worth more than $200,000 annually.
"Shareholders have a significant interest in information regarding relationships between the company and its directors," SEC deputy enforcement director Linda Thomsen told AP. "Failure to comply with the SEC's disclosure rules in this area impedes shareholders' ability to evaluate the objectivity and independence of directors."