As part of a sweeping effort to staunch criticism of spending at InfoGroup, Vin Gupta has been relieved of his position as chairman of the board at the company formerly called InfoUSA.
However, Gupta, who holds 40% of InfoGroup’s stock, will keep his job as CEO of the list-and-database giant.
Bill Fairfield, the company’s lead independent director was named chairman of InfoGroup’s board effective July 16.
InfoGroup is being sued by shareholders who allege the company misspent millions of dollars. As a result, the Securities and Exchange Commission and an internal board committee have been investigating company spending.
On July 16, the internal committee concluded that certain expense reimbursements Gupta received—including those for lodging, flights, meals, private club memberships, use of his residences, and legal fees—were excessive. The committee also determined to be excessive the company yacht, corporate use of private aircraft, expenditures on life insurance premiums and certain unspecified employee salaries.
As part of the changes detailed in an SEC filing Wednesday, the internal committee has asked three board members to resign: George Haddix, Elliot Kaplan and Vasant Raval.
Gupta has also agreed to support any new members the board’s nominating committee recommends through the company’s 2010 annual meeting.
The board is also selling the company yacht, and prohibiting buying or leasing any company yachts in the future. The use of private jets for personal use is also barred.
InfoGroup is also looking for a new chief financial officer to replace current CFO Stormy Dean, who will keep his position until CFO is found and then be given a position in corporate strategy and planning.
Gupta has also agreed not to buy any more InfoGroup stock through July 21, 2009 and to pay the company $9 million over five years. The agreement is subject to court approval.
Also, any transaction worth $120,000 or more between InfoGroup and any company affiliated with an officer or large shareholder will require pre-approval by the board.
A lawsuit filed last year by Cardinal Value Equity Partners and two Dolphin Partnership investment funds against Gupta accused him of improperly using company money to pay for the use of a skybox at the University of Nebraska’s Memorial Stadium, a yacht, jets, cars, and condos in Hawaii and California.
Gupta has said these were legitimate business expenses, such as for entertaining clients.
Meanwhile, InfoGroup’s board has also created a new job title, executive vice president of business conduct and general counsel, to develop and oversee business-conduct-and-ethics policies and oversee certain company expenses and reimbursements. The EVP of business conduct and general counsel will report directly to InfoGroup’s chairman of the board.
Current counsel, John Longwell, will serve as InfoGroup’s EVP business conduct and general counsel until the board can find someone else to fill the position.
“The decisions taken by the SLC [internal committee] address the internal deficiencies identified during the review and create a different governance process and structure that will enable the company to build on our past successes,” said Fairfield in a statement.
Added Gupta: “I thank the Special Litigation Committee for all its hard work and endorse the recommended governance changes, which will implement best corporate practices at InfoGroup.”
