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CFO is fired for "failing to perform duties"; SEC investigation continues.
Stephen Taub, CFO.com | US
August 16, 2005
United Rentals Inc.’s chief financial officer has been fired after refusing to cooperate with an investigation into the company’s accounting practices.
According to documents filed with the Securities and Exchange Commission today, United Rentals terminated John Milne, the president, CFO, chief acquisition officer, and secretary “for cause,” because he was unwilling to respond to questions related to an SEC inquiry. Milne was given 30 days to cooperate with the mandate that was issued by a special committee of the United Rentals board that is currently reviewing the SEC probe.
Milne was also asked to resign from the board. United Rentals has launched a search for a new CFO.
One month ago, United Rental’s board announced that Milne failed to perform his duties and would be fired if he did not remedy matters within the "30-day cure period" laid out in his employment agreement.
According to today’s filing, Milne is not entitled to any severance payment because he was fired for cause. However, he is entitled to be paid any accrued base salary, unreimbursed expenses and accrued vacation. Under his employment agreement, Milne is also entitled to receive his 2004 bonus. The maximum bonus he could receive is $825,000. However, he is not entitled to any bonus for 2005.
Milne will forfeit 275,000 performance units, part of the company’s cash-based Long Term Incentive Plan, and 120,000 stock units awarded under the company’s 2001 Senior Stock Plan. The finance chief did not have any other unvested awards under these plans or any other company compensation plan. The board noted, however, that the company will repurchase common stock and warrants from Milne for a little more than $7 million.
Previously disclosed accounting problems have plagued the Greenwich, Connecticut-based company during the past year. For example, the SEC launched a probe into several short-term, equipment sale-leaseback transactions. The company also reported that the accounting for some of its transactions in 2000, 2001, and 2002 was incorrect, and that "the special committee is continuing to review these transactions as part of its broader review relating to the SEC inquiry."
Officials have already announced that restatements for 2000 through 2003, as well as the first nine months of 2004, will be issued to correct expense booking problems related to its self-insurance reserve. Earlier this year the company also revealed that a material weakness associated with estimating reserves for workers' compensation claims was found. Officials said that they believe adequate measures have been taken to remedy the control weakness.