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Diamond Foods, Inc. Message Board

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  • cedarvalleycapital cedarvalleycapital Mar 25, 2012 2:24 PM Flag

    Part of Execs punishment has already occurred

    And the clawbacks will directly benefit shareholders and wont be limited to just the ceo and cfo, but anybody who received shares based on the wrong assumption of compensation. This will add a few % value to shares as it is anti-dillutive.

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    • I take both your points, but there is no evidence so far released, other than the audit committee's comments, and the subsequent suspension/dismissal of CEO/CFO, that the two execs were dishonest or the only culprits, either. Or that it was done deliberately and at their direction. This is the core of the argument e.g. against Corzine at MF Global.

      I fI were in DMND's position, would I want my auditor's integrity challenged, and would I challenge it? Possibly not recognizing that a much longer period of scrutiny, with new auditors, would put even greater pressure on the company, financially speaking, and would destroy the company. So I reserve some "slack" for failure of the audit process, which might have caught the mistiming ealier, or a statement that it was not an "innocent error". The firing of the execs certainly suggests dishonesty, or incompetence, or inadequate internal financial safeguards, or bad supervision, all of which might be reasons for firing. But firing the execs may not be the only remedy needed. And that would affect your "clawback" bottom line.

      I would really like to see a statement as to how the BoD concluded that improperly timed payments made it into the financials in the first place. That they are there could be an indictment of auditing practices (internal and external) themselves. It's clear that the checks for those payments were available to the Board, as well as the chain of authorizations up the line. There might also be evidence as to whether the company's auditor or a consulting firm was consulted before the payments were made and recorded.

      All I'm saying is that we should wait for the full story, which may or might not eventually emerge, before drawing conclusions as to whether the CFO and CEO were dishonest or engaged in misconduct. By the way, I don't disagree with the removal of the key execs, either. They have to take the bullet for the debacle on their watch.

      I will respond to clawbacks in a separate message in a few minutes.
      They will not be the panacea that many expect.

      Good luck to longs.

      • 1 Reply to shbrom
      • You are making this way too complicated. And I don't know what is your point. Do you think we should think good things about Mendes and Neil until the conclusive evidence is released?

        These two chaps were fired from their leadership roles. They will lose more money when the SEC imposes clawbacks. Using their bare hands, they reduced the stock price of DMND from $90 down to $23.

        Most investors don't really care about Mendes and Neil. All they know is that their stock is at $23 and they want it to go higher. What happens to Mendes and Neil going forward has nothing to do with this initiative.

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