InfoGroup chairman stands down over ‘excessive' payments

US-- Vin Gupta has given up his chairmanship of InfoGroup (formerly InfoUSA) and agreed to pay $9m to settle a shareholder lawsuit, after an internal investigation deemed various payments made to companies he owned “excessive”.

The data firm, which owns several MR agencies, also sacked three board directors: George Haddix, Elliot Kaplan and Vasant Raval, while chief financial officer Stormy Dean is to move to a new position “in the areas of corporate strategy and planning”.

Gupta, who founded the company in 1972 and owns more than a third of its stock, will continue as chief executive officer, while Bill Fairfield, who has been an independent director since 2005, takes over the chairmanship.

Allegations of misspending at InfoGroup were first made in a shareholder lawsuit, which triggered an informal investigation by the Securities and Exchange Commission late last year.

The company then set up its own committee to investigate a raft of payments, including $8.2m paid to Gupta's Annapurna Corporation between 2001 and 2005 for the use of private jets, a yacht and a personal residence in California, as well as other unidentified travel expenses.

In light of the committee's finding that “various related party transactions, expense reimbursement and corporate expenditures were excessive”, the firm's board said it would implement new policies relating to business expenses and separate the roles of chairman and chief executive officer.

New rules on the size of transactions that the company's officers can enter into will require InfoGroup to sell its yacht, and prohibit the future ownership and leasing of yachts.

The firm said its five-month review involved searching more than a million pages of documents and interviewing 79 current and former employees.

Gupta said the changes to the company's management would implement best corporate practice at InfoGroup. “I believe this resolution will allow the company to move forward and continue to focus on providing our clients with industry-leading marketing solutions,” he said yesterday.

InfoGroup said Gupta has orally agreed to pay the company $9m over five years to settle the litigation, subject to court approval of a settlement agreement.

Author: Robert Bain