Children's Place ceo found to have violated company policies
SECAUCUS, N.J. The Children's Place Retail Stores ceo Ezra Dabah is resigning from the company, at the request of the board of directors, effective immediately, the company said today. The announcement follows the company's report that Dabah, along with another senior executive at Children's Place, violated the company's policies and procedures. Dabah will remain a member of the board of directors, the company reported. Chuck Crovitz, a current board member, will serve as interim ceo.
Children's Place reported today that Dabah violated the company's internal policies related to security trades, citing an instance where he did not properly report to the company in increase in his wife's ownership of shares as a result of a trust distribution. The company also said that on two occasions Dabah pledged shares of the company pursuant to a customary margin account during a ``black-out period'' when prior approval of the company's board was required for such pledges. According to the company's board, these actions violated the company's code of business conduct. However, the board also concluded that no improper personal benefit was obtained nor did the violations have a material adverse affect on the company. Dabah is required to reimburse the company for its out-of-pocket costs in investigating the violations.
In a similar investigation, the company found that the chief creative officer at The Children's Place brand, grossly overlooked the company's expense reimbursement practices and violated the company's code of business conduct, but did not involve an intentional effort to obtain an improper personal benefit. The board imposed significant sanctions on the individual involved, including refund of amounts erroneously charged to the company, a change in position so that the individual will no longer be an officer of the company and reimbursement of the company's out-of-pocket costs incurred in connection with its investigation of the matter, but concluded that dismissal from employment was not warranted.
The company said that because of Dabah's resignation and the change in executive roles, it expects that it will need more time to complete its overdue Annual Report on Form 10-K for the fiscal year ended Feb. 3, including its audited financial statements for such year, and its other overdue SEC periodic reports. According to the company, this delay is necessary in order for Crovitz to become familiar enough with the company in order to make the necessary management representations for the dompany's independent auditors and certification of SEC reports. The company intends to complete and file such reports as soon as practicable.
As previously announced, Children's Place received an extension until Nov. 14 from the board of directors of the Nasdaq Stock Market to satisfy Nasdaq's requirement that the company be current in its SEC periodic reporting obligations. If the company is unable to satisfy the current or any extended deadline, it continues to anticipate that its shares will be delisted from the Nasdaq Stock Market.