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LN ‘inflated income to compensate execs’, says lawsuit

Investor Shiva Stein accuses Live Nation of misrepresenting its 2017 adjusted operating income in order to ensure five executives received performance bonuses

By Jon Chapple on 24 May 2018

NY's eastern district's Theodore Roosevelt Federal Courthouse

NY's eastern district's Theodore Roosevelt Federal Courthouse


image © Douglas Palmer

Update (25 May): Stein has withdrawn the complaint.

“We are pleased that the plaintiff withdrew her frivolous lawsuit against Live Nation,” reads a Live Nation statement. “The plaintiff and her attorneys wrongfully accused Live Nation of not meeting performance targets tied to executive compensation when, in point of fact, Live Nation is fully transparent on our pay practices, and payment of executive bonuses was fully in line with those practices which are clearly laid out in our 10-K and proxy.”

 


Live Nation falsely inflated its impressive 2017 financial results to ensure its execs received more than US$10 million in performance-related bonuses and stock awards, an investor has alleged.

Shareholder Shiva Stein says Live Nation’s recently published 2018 proxy statement contains “false and misleading statements concerning the cash performance bonuses paid to the company’s named executive officers”, which were contingent on the company achieving at least 90% of a $700m adjusted operating income (AOI) in 2017, according to a suit filed yesterday in the eastern district court of New York.

The proxy statement, says the complaint, states that Live Nation achieved 104% of its AOI target last year, which entitled CEO Michael Rapino, president Joe Berchtold, chief accounting officer Brian Capo, general counsel Michael Rowles and CFO Kathy Willard to combined bonuses of $9,600,667 in cash and $1,254,327 in stock.

“None of the named executive officers should have received a cash incentive award”

However, alleges Stein, Live Nation’s form 10-K (annual report) for 2017 gives AOI as $625,142,000 – less than 90% of $700m, “so none of the named executive officers should have received a cash incentive award or had their restricted stock awards vest for 2017”.

This, say Stein’s lawyers, Barrack, Rodos & Bacine, means either the proxy statement or the form 10-K is false. “Under all of these scenarios, the 2018 proxy statement is false and misleading,” the suit says.

Stein seeks a permanent injunction that compels the execs to return their performance-related compensation, Live Nation to issue a new proxy statement and for shareholders to be allowed to vote on bonuses armed, this time, with the “full and accurate information”.

At press time, Live Nation had not commented.

 


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