Reckitt Says Non-Disclosure of CEO Share Pledge an Oversight
Reckitt Benckiser Group Plc (RB/), the maker of Durex condoms, said an administrative oversight led to its failure to disclose that Chief Executive Officer Rakesh Kapoor pledged 8.7 million pounds ($14 million) worth of shares to secure a personal loan more than two years ago.
Kapoor, who at the time was an executive vice president in charge of category development, notified the company about the pledge, which was done across four separate transactions, a spokesman for the Slough, England-based company said. Reckitt Benckiser should have informed regulators of the development and the company said it has since tightened procedures.
The shares were used as collateral against a loan from Bank of America Merrill Lynch and represent 85 percent of Kapoor’s total shareholding of 281,869 shares, according to a statement from the company yesterday. Liam Parker, spokesman at the U.K.’s Financial Services Authority, declined to comment.
“It sounds more like an embarrassing oversight than a fundamental issue,” Andrew Wood, an analyst at Sanford C. Bernstein, said in an e-mail.
In December 2008, David Ross stepped down from the boards of mobile-phone retailer Carphone Warehouse Group Plc (CPW), self- storage operator Big Yellow Group Plc (BYG), and long-distance coach provider National Express Group Plc (NEX) after he backed personal loans with those companies’ shares without informing them. The failure to disclose the dealings breached U.K. rules for directors of publicly traded companies.
Reckitt Benckiser fell 0.9 percent to 3,614 pence at 10:35 a.m. in London trading.
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