For MDC Partners Founder and CEO Miles Nadal, 2014 was a very good year. A little too good, according to the U.S. Securities and Exchange Commission, which is continuing an investigation that began last fall concerning improperly expensed items by Nadal over the period from 2009 to 2014.
Nadal has already agreed to pay back to the company $8.6 million in improperly expensed items as a result of an SEC investigation, but the company’s leader certainly has money to spare. In its newly filed 2015 proxy statement, MDC reported paying Nadal total compensation of $16.8 million last year, with $1.850 million in base salary and a bonus of $11.7 million. His compensation is based on performance, so he actually earned less than 2013, where his total compensation was $20.73 million.
That’s on top of the $81 million windfall Nadal received last spring when he sold off nearly 40% of his holdings in the company.
Nadal receives many perks as CEO, including $926,005 last year in "other compensation," which included $91,038 aircraft costs. In fact, his usage of this aircraft helped to land him in the crosshairs of the SEC and forced changes in its corporate policy. Nadal frequently uses the jet from his residences in the Bahamas and West Palm Beach, Florida to and from the company’s corporate office in New York, N.Y. While Nadal has traveled on business, a member of his family has, from time to time, accompanied him on the corporate aircraft, as stated in the report.
Now, under its new policy guidelines, Mr. Nadal is required to reimburse the company for the allocated cost of the corporate aircraft for travel by any of his family members at a rate that is the greater of the Standard Industry Fare Level (SIFL) rate published by the U.S. Department of Transportation.
MDC also pays for his Internet access. It spent $71,967 for Mr. Nadal’s personal use of a corporate apartment when he is in New York City on business. MDC pays for 50% of the lease and 100% of the utilities, local phone charges, cable and internet charges of the apartment, which it says is more cost effective than providing Nadal with a hotel when he is in New York on company business.
The company also makes an annual cash payment to Mr. Nadal of $500,000 for retirement benefits, employee health benefits, and perquisites and may, at the discretion of the Compensation Committee, grant long term equity incentives -- or cash -- with a targeted grant date value of up to 300% of his then current retainer (base salary).
In the event of a change of control of MDC Partners or if Nadal departs for some other “good reason” his severance package would be approximately $27 million according to his current employment contract.
While the SEC investigation is ongoing, the company has already implemented some changes in its policies including adoption and implementation of a new private aircraft usage policy and a new travel and entertainment policy. As part of that change the company will conduct quarterly reviews with respect to compliance by its executive officers.
Also Michael Sabatino, who had been the firm’s Chief Accounting Officer is shifting to a new role where he will undertake unspecified “special projects.” For now, CFO David Doft will also assume the duties of the company’s principal accounting officer.
According the proxy statement Lori Senecal President and CEO, The MDC Partner Network was the second highest paid executive at MDC Partners last year with total compensation of a little more than $2.3 million. General Consul Mitchell Gendell was number three with a total compensation package of about $1.25 million and Doft was fourth with total comp of about $1.24 million. Sabatino rounded out the top-five paid executives with a compensation package that totaled a little more than $1.23 million.