Via Gawker, a story that puts yet another chink in Ben Carson's saintly armor:
Politics aside, few would argue that GOP presidential hopeful Ben Carson—a retired pediatric neurosurgeon—isn’t a bright guy. So what does it mean that, while serving on Costco’s board from 2002 to 2005, Ben Carson was accused of granting over 1.01 million shares worth of illegally backdated stock options?
The allegations stem from two shareholder derivative complaints and their consolidated settlement: documents obtained by Gawker that list Carson as a co-defendant alongside most of Costco’s board and several of its C-level executives.
The suits accused Costco’s board, and in particular members like Ben Carson who served on its “compensation committee,” with essentially cherry-picking the issue dates for Costco’s incentive and nonqualifiedstock options. By changing the option grant date to a previous day on which the company’s stock price was exceptionally low, the board guaranteed that these stock options would have a greater profit margin once Costco’s executives chose to exercise them (i.e. sell shares). These cheap stocks—real bargains in direct violation of the company’s own policies—were then passed on to Costco’s senior management and, in some cases, bestowed upon the discount retailer’s rank-and-file employees. It was like an elite Costco, inside the Costco.
All told, the beneficiaries of this scheme allegedly wrested over $173 million away from the company in pumped-up stock sales and unrecorded compensation during the 10-year-period covered by the two civil suits. And, incidentally: The U.S. Attorney’s Office for the Western District of Washington state came to similar conclusions after conducting a two-year investigation into Costco’s executive compensation practices. The U.S. Attorney’s Office investigation was looking at backdating from 1996-2003. But this shareholders’ derivative suit covered a slightly wider range, 1995-2005, for the backdating fraud itself, and covered up to the date of the filing, 2009-ish, for all those “by-product” charges, like the inaccurate SEC filings. The U.S. Attorney’s Office and their multiagency task force, however, ultimately declined to pursue criminal charges after considering “multiple actions taken by Costco executives, including the fact that Costco self-reported the backdating to the SEC [in 2006].”
The complaints were filed in September 2008 and June 2009 respectively, by Pirelli Armstrong Tire Corporation Retiree Medical Benefits Trust, a Tennessee-based employees beneficiary association, and by Daniel Buckfire, a random guy from Michigan with, you know, Costco stock.
