A substantial number of companies have failed to correctly total the compensation of one or more directors, according to new research by the Corporate Library.
In a study of more than 2,000 companies, the Corporate Library has found that 126 firms failed to calculate the correct compensation for directors, two of which – Atlas Worldwide Holdings and Aspect Medical Systems – have corrected their errors and refiled with the Securities and Exchange Commission.
Differences ranged from one $1 to more than $125,000, and in some cases only one director was involved; in others, mistakes affected the whole board. Although rounding numbers to the nearest whole-dollar figure could account for some errors, missing columns, ignoring particular data points, and transposing figures accounted for most of the addition problems.
“Why, in an age when you can key numbers into a spreadsheet and use a simple formula to add them with perfect accuracy, did 126 companies have total compensation columns that did not accurately reflect the sum of its table components?” Greg Ruel, research associate at the Corporate Library and author of the report, said in a statement. “How could such basic addition mistakes go unnoticed and uncorrected?”
The figures in the study indicate a need for improved due diligence and a higher level of scrutiny of board financial disclosures to validate accuracy. Sixty-six companies in the study had only one director whose total pay didn’t add up correctly, and the money involved amounted to just more than $950,000.