SEC and Express Settle Charges Related to Disclosure Obligations

The Securities and Exchange Commission (SEC) settled charges with Express, Inc., in which it alleged that the fashion retailer failed to disclose executive compensation paid to its now-former CEO in fiscal years 2019, 2020 and 2021.

Express Inc.’s failure to disclose $979,269 worth of perks and personal benefits to its CEO during those years resulted in it understating the “All Other Compensation” portion of the CEO’s compensation by an average of 94%, the SEC said in a Tuesday (Dec. 17) press release.

“Public companies have a duty to comply with their disclosure obligations regarding executive compensation, including perks and personal benefits, so that investors can make educated investment decisions,” Sanjay Wadhwa, acting director of the SEC’s Division of Enforcement, said in the release.

Express said in April that it filed for Chapter 11 bankruptcy and that it received a letter from a group led by WHP Global to start the court-supervised process of formally selling the company.

In June, a transaction closed in which a new joint venture led by WHP Global acquired a majority of Express, Inc. operations.

WHP Global did not immediately reply to PYMNTS’ request for comment on the Tuesday announcement by the SEC.

According to the SEC’s press release, Express agreed to a cease-and-desist order without admitting or denying the SEC’s findings.

When settling the charges, the SEC declined to impose a penalty, citing the company’s “self-report, cooperation and remediation,” per the release.

Wadhwa said in the release that “although Express fell short in carrying out its obligation, the Commission declined to impose a civil penalty based, in part, on the company’s self-report, cooperation with the staff’s investigation, and remedial efforts.”

When announcing the acquisition of Express by the joint venture it leads, WHP Global said the joint venture, Phoenix, intends to operate direct-to-consumer (D2C) channels for Express and its subsidiary Bonobos, which include more than 450 brick-and-mortar stores as well as the brands’ eCommerce channels.

“With the restructuring actions accomplished during the Chapter 11 process, we believe Express is now well-positioned for a powerful path forward, benefiting all stakeholders, including our valued vendor partners, licensees, landlords and dedicated team,” WHP Global Chairman and CEO Yehuda Shmidman said in a June 14 statement.