CHD's board has imposed sanctions on its Chairman & CEO in connection with an FTC investigation and related litigation.
In Jun-09, Church & Dwight (NYSE: CHD) disclosed the receipt of a subpoena and civil investigative demand issued by the FTC in connection with an investigation related to the distribution and sale of condoms in the United States. At the time, CHD was also involved in litigation with Mayer Laboratories, a California-based competitor. The litigation related to CHD's condom sales and marketing practices. Both of these matters remain ongoing.
At some point after the litigation and related investigation were initiated, CHD issued instructions to certain employees to preserve any emails or other documents that might be relevant to the foregoing proceedings. James Craigie, Chairman & CEO for nearly 5 years, subsequently deleted emails and has acknowledged doing so. CHD has been able to recover substantially all of the deleted emails and it does not believe that Mr. Craigie's intent was to impede, impair, or obstruct the FTC investigation or the related litigation.
However, the board of directors (without participation from Mr. Craigie) met several times with its internal and external counsel to discuss this matter. The board determined that Mr. Craigie's actions had violated company policies. A special committee appointed by the board, consisting of compensation committee members among others, recommended to the board that Mr. Craigie (i) receive no award under the company's 2011 annual incentive plan, (ii) no salary increase in 2012, and (iii) no increase in the value of stock options to be granted to him in 2012. These sanctions were imposed on 6-Jan-12. The decisive actions taken by the board are to be applauded, but the actions of the Chairman & CEO remain concerning. CHD stated that Mr. Craigie has acknowledged his understanding of the significance of this matter.
Here is the 8-K disclosing the sanctions.