Near Death (Corporate) Experiences
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7:30 – 8:00am: Continental Breakfast
8:00 – 9:00am: Program
In October 2011, investors and analysts began questioning certain crop payments made by Diamond Foods to its growers. The Audit Committee of Diamond Foods’ board of directors commenced an internal investigation of the company’s accounting practices. The timing could not have been worse: Diamond was weeks away from closing an acquisition of Pringles from Procter & Gamble valued at $2.35 billion. The Audit Committee investigation began a period of intense crisis and turbulence for Diamond that few could have predicted at the time, including:
- Collapse of Diamond’s stock price, resulting in two-thirds loss of the company’s market cap
- Delay and eventual abandonment of the Pringles’ acquisition
- Exit of the two most senior officers at the company
- The company’s default on its credit agreement obligations under which hundreds of millions of dollars of debt had been incurred, including for the acquisition and audit committee investigation
- A protracted effort to restate two years of financial statements, precipitating possible de-listing of trading of Diamond securities from NASDAQ
- An SEC investigation regarding accounting irregularities
- Shareholder lawsuits with over a billion dollars in potential exposure
In the face of such adversity, it’s remarkable that Diamond managed to navigate a path to survival and recovery.
Our panelists shared their intimate knowledge of the challenges, strategies and decisions involved in Diamond’s reemergence from such dire events. They examined how internal and external SEC investigations unfold, what strategies were particularly effective in dealing with the shareholder lawsuits (and associated D&O coverage issues), how subtle considerations can make a dramatic difference in managing the restatement process and how the company was able to rebuild its credibility with important stakeholders.
Our Panel
Stephen Kim has been the EVP, general counsel for Marin Software since October 2014. Stephen worked for almost 10 years at Diamond Foods, a consumer packaged-goods company in San Francisco. While there, Stephen was EVP, general counsel and chief legal and compliance officer from March 2014 to September 2014; SVP, general counsel from January 2008 to March 2014 and VP, general counsel from March 2005 to January 2008. Previously he served as general counsel for Oblix, an enterprise software company before acquired by Oracle.
Susan Muck is a partner of the securities litigation group and co-chair of the securities enforcement group at Fenwick. She has conducted internal investigations into alleged bribery and accounting fraud for multinational corporations, represented companies and individuals in SEC investigations and at trial and regularly advises boards and management on disclosure and accounting issues, the Foreign Corrupt Practices Act and other regulatory matters. Susan also has extensive experience defending shareholder and class actions that often accompany regulatory matters.
Michael P. Murphy is an AlixPartners managing director with 25 years of professional experience in providing restructuring and financial consulting services. He specializes in consulting engagements on behalf of investors and boards of directors, as well as debtors and creditors involved in operational and financial turnarounds and loan workouts. He also specializes in various financial advisory services involving such matters as due diligence, feasibility studies and litigation matters. Mike has served in interim officer roles, including COO, chief restructuring officer, CFO and treasurer.
Moderator
Gordon Yamate chairs the board of trustees of the Japanese American National Museum in Los Angeles and serves on the board of directors of the Silicon Valley Community Foundation. As an adjunct lecturer in law at Santa Clara University Law School, he teaches a seminar level corporate governance course. Gordon also served as general counsel for Knight Ridder and Liberate Technologies after moving from the Silicon Valley law offices of McCutchen, Doyle, Brown and Enersen (later Bingham McCutchen).
This program, like all SVDX programs, is subject to the Chatham House Rule.
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