The Securities Exchange Commission (SEC) investigation of and the action taken against MDC Partners Inc. (“MDC”) and its former Chief Executive Officer, Miles S. Nadal (“Nadal”), underscore the importance of proper disclosure of executive compensation. Between 2009 and 2014, MDC disclosed in its proxy statements some, but not all, of the perquisites paid on Nadal’s behalf. The estimated $11.285M worth of perquisites that MDC failed to disclose included private aircraft usage, club memberships, cosmetic surgery, yacht and sports car related expenses, jewelry, charitable donations, pet care and personal travel expenses.

On January 18, 2017, the SEC issued a press release describing the terms of the settlement related to MDC’s problematic disclosure practices, in which MDC agreed to pay a $1.5M penalty in settlement for various disclosure violations, including the failure to disclose Nadal’s compensation. In settling the matter with MDC, the SEC took into consideration the remedial actions that MDC promptly undertook, including adding three new independent directors to its Board of Directors, creating a role of a SVP of Internal Controls and Compliance, replacing its Chief Accounting Officer, and implementing new internal controls and compliance policies and procedures, in addition to training programs for its executives concerning expense reimbursements.