Skechers’ top executives spent millions of dollars jetting off to tropical vacations in Fiji, Bora Bora, and Hawaii on the company’s private planes — and the footwear giant’s board didn’t do anything to stop them, according to a lawsuit.
The suit brought by a shareholder against the Manhattan Beach, Calif., company’s board of directors claims there were no limits placed on CEO Robert Greenberg and his two sons — who also serve as Skechers execs — as they used corporate assets for personal use.
The filing Thursday in Delaware Chancery Court, which was obtained by The Post, claims Greenberg and his sons Michael, Skechers’ president and co-founder, and Jeffrey, the company’s vice president of electronic media, took “excessive” trips on a pair of twin-engine eight-seat Bombardier Global Express jets.
The planes cost more than $4,400 per hour to operate, according to court documents.
Thirteen listings of Bombardier Global Express jets for sale on aviation-resource site GlobalAir.com show that the plane retails between $9 million and over $15 million depending on the model year, with upgrades like “bespoke carpeting,” removable partitions, and enlarged cabin windows.
It’s unclear which models of the private plane Skechers owns.
Though private jet access is a prerequisite granted under the Skechers managers’ compensation plans, “their personal use of the planes was way beyond excessive,” Melinda Nicholson, a Louisiana-based attorney for the Skechers shareholder who brought the suit, told Judge Morgan Zurn at a hearing on whether the case should be thrown out, according to Bloomberg.
Skechers’ directors have disputed that company jet use for non-business trips to France and the Bahamas — and more posh destinations like Seychelles and Los Cabos — violated the terms of the executives’ compensation packages, Bloomberg reported.
Salary.com estimated that Greenberg took home $22.1 million in annual compensation in 2022, including over $6 million in base pay, a nearly $8 million bonus, and $6.9 million in stock awards — on par with Skechers’ proxy filings.
The same year, his son Michael received $15.5 million, according to Salary.com‘s estimates, including $5 million in base pay, a nearly $4 million bonus, and close to $6 million in stock awards.
The father-son duo founded Skechers in 1992. The company recorded $3.5 billion in profits in 2022 — a 12.51% increase from 2021.
Proxy filings obtained by Bloomberg showed that other members of Greenberg’s family on Skechers’ payroll raked in a collective $12.3 million in annual compensation — some of which came in the form of personal use of the company’s planes.
Greenberg’s other children — Jason and Joshua Greenberg, and Jennifer Greenberg Messer — are all reportedly on Skechers payroll, with some earning multimillion-dollar salaries, according to 2022 proxy filings.
Marlene Greenberg — Robert Greenberg’s sister — is also a non-executive employee of Skechers, along with Michael’s son Chase and brother-in-law Andrew Bronstein.
Investors calculated that in 2020, 56% of one of the Bombardier jet’s flight time consisted of personal use, according to Bloomberg, while the following year, personal private jet use increased to a whopping 64% for one of the planes.
Nicholson reportedly cited corporate jet use by Greenberg’s counterparts at Apple, Johnson & Johnson, and ExxonMobil.
The Skechers executives incurred costs of as much as $1.1 million each on personal travel in recent years, according to court filings obtained by Bloomberg — above the $700,000 bill Apple CEO Tim Cook racked up in expenses on his own private jet trips.
Nicholson’s filing, however, claims that in 2020, Robert incurred personal use costs of $223,694, while Michael’s bill surpassed $400,000 — sums the attorney asked that the executives pay back.
Most similar companies cap jet use well below those levels, according to Bloomberg, which reported that the average corporate plane expenses among S&P 500 executives was about $54,000 in 2015.
Without proper oversight by Skechers’ directors, executives’ private jet use is “costing the company significant money,” Nicholson said.
Representatives for Nicholson at Kahn Swick & Foti law firm declined to comment beyond the lawsuit.
The Post has also sought comment from John Gildersleeve at Munger, Tolles & Olson, the firm representing Skechers’ directors.
Judge Zurn now must rule on whether the case can proceed, and previously expressed skepticism about the claim that board members failed in their oversight duty, according to Bloomberg.
“It makes me nervous to be asked to hold directors liable solely because they may have chosen not to do something,” the judge said, per the outlet.
Gildersleeve has argued that “the plaintiffs can’t legitimately claim a failure of oversight” simply because board members didn’t take steps to limit executives’ contractual rights, Bloomberg reported.
“This was not an example of squandering corporate resources,” Gildersleeve added.
On Friday — the day after the lawsuit was filed — shares of Manhattan Beach, Calif.-based Skechers slipped less than 1%, to $48.43.
Credit: Source link
