Remember when those computer companies used to ship out their brand new products to the stores- without having secured the sales?  Or, claimed to have a product (hardware or software) to enter the market in days to kill competitor entries?  (IBM did this to Osborne and Control Data; Microsoft was adjudicated in a court case headed by Stanley Sporkin [who also dealt with the Home Intensive Care/Health and Human Services (HHS) spat a few years later.)   Or, the auto companies who delivered vehicles to their dealers- even though no one had ordered them

Well, Monsanto did about the same thing.   It did not properly include the amount of rebates and costs (as in millions of dollars) involved in the sales of its Roundup weed killer for 2009, 2010, and 2011.

What Monsanto did was pay the rebate to distributors in one year and account for those rebates during the next year or so.  The rebates were an attempt to boost the market share of Roundup, which sales has been lagging.  As such, Monsanto (il)legally  mis-stated (that’s read as- inflated) its earnings.  (Amazing how no one blames or prosecutes Apple for misstating the amount of income tax it pays or will pay- and withholds that cash from distribution as dividends to its stockholders?   For years, now.)

As punishment, Monsanto will fork over $ 80 million to the Securities and Exchange Commission (SEC).   And, as the SEC routinely does (because, despite the BS that corporations are people, firms simply never end up in jail), it allowed Monsanto to NOT admit to wrongdoing.

But, the SEC is requiring three senior accounting and sales executives to shell out some money.  (Think about it- how could a company break the law if no humans were involved?)  Three folks will shell out to pay fines of $ 30 to $ 55 K.   (The SEC found no fault with the CEO or CFO, after extensive investigation.)

As most of you know, most executives receive insanely large annual compensation.   What you may not realize is that their salary may only be $ 1 or $ 2 million (yes, I did use the word ‘only’),  which is amplified by $ 10, $ 20, $ 50, or hundreds of million in bonuses and stock incentives.  As an example, Brian Moynihan (BankofAmerica) is being awarded compensation that is 23% more he got last year.  But, his salary is unchanged at $1.5 million.  It’s the stock grants that are growing so exponentially.  (Note that investors have been trying to strip Moynihan of his chairmanship because the stock performance has lagged other banks.   BankofAmerica also had to resubmit its capital plan because it failed the mandated stress tests.)   So, despite corporate performance, these stock bonuses are often written to ensure they are paid to executives, regardless of merit.

Why did I bring up this example?   Because despite how many of you feel about Monsanto, the CEO and CFO also demonstrated that they are honorable people.  Their compensation was also linked to stock performance.   And, since the three years where the mis-stated earnings caused the stock price to rise, these two individuals were overpaid as a result.

So, Hugh Grant, the CEO of Monsanto is returning $ 3,165,852 of his bonus compensation.   And, Carl Casale, CFO, is returning $ 728,843.  While that $ 4 million is a drop in the bucket compared to the $80 million fine the company is paying in fines, at least Grant and Casale are treating the Monsanto stockholders with respect- and are doing the honorable thing.

(Yes, the SEC could have gone after Grant and Casale for these funds under the Sarbanes Oxley (SarbOx) rules that have been in effect since 2002.  However, since the SEC had already decided that these two executives were not involved in the fraud, that SarbOx breach is highly unlikely.   Because SarbOx would have required the SEC to demonstrate their individual involvement in the fraud.)

Moreover, Monsanto had already restated its earnings to the public and to its stockholders for those three years.

So, next time you think about Monsanto, consider the facts that it’s a lot more honorable than you charge.  Your bias against GMO (genetically modified organisms; in this case, the organisms are plants and seeds) – despite scientific proof of safety- is leading you astray.

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