Once again, as Wall Street waits for happy hour, we Fools wade into 8-K filings that, if the timing is to be believed, executives would rather you not read.

Filings like this one from ailing clothier The Children's Place (NASDAQ:PLCE) and this one from educator Apollo Group (NASDAQ:APOL), both of which received non-compliance notices from the Nasdaq.

But, as is common with 8-Ks, Apollo's had an additional wrinkle. Management revealed that, in the quarter ended on Aug. 31, 2006, it understated Apollo's allowance for doubtful accounts by roughly $38 million. Nice. At least that's only 6% of revenue.

Wang wrung
Still more interesting were the findings of CA's (NYSE:CA) Special Litigations Committee, which recommended legal action against former CEO Charles Wang, who is accused of complicity in the accounting scandal that has plagued the firm for years.

How unsurprising. I've no idea whether Wang is guilty, but CA had a reputation as a den of thieves as late as 2001, when an ugly proxy fight broke out. Wang was reportedly enjoying the highest salary in U.S. corporate history at the time. Today, he's the owner of the New York Islanders hockey team.

For his part, Wang questioned the credibility of the findings in a statement provided to Reuters:

I find it hard to understand how the Special Litigation Committee could believe the information they were given was credible, when their sources are those who perpetrated the crimes at issue and then lied about them to both internal company investigators and the government.


Look, I'd be more inclined to feel sorry for Wang if CA weren't targeting others. But that's not the case. Former CEO Sanjay Kumar, who is to serve 12 years in prison for his role in engineering fraud at CA, will repay $15.25 million to the company as part of the Committee's recommendations. Former CFO Peter Schwartz is also being targeted, as are six other former executives who, according to the filing, have already pled guilty to securities fraud and/or obstruction of justice.

Grand Theft Shareholder
But my favorite filing this week comes courtesy of Take-Two Interactive (NASDAQ:TTWO), which on Friday agreed to what could be the most generous severance package I've ever seen.

Former CFO Karl Winters, who resigned on April 9, will, for the next 18 months, receive his base salary and target bonus, and all health benefits. By my math, that could equal at least $885,000. Here's how:

  • He'll be paid 1.5 times his annual salary of $405,000, or $607,500.
  • He'll receive at least one bonus equal to 50% of his salary, or $202,500.
  • He's agreed to a 90-day consulting gig paying $25,000 per month.

Notice that I'm not including Winters' stock positions. But those, too, are lucrative. According to the filing, all grants are to be vested, which would give him 23,333 shares of restricted stock and 50,000 common stock options with an in-the-money strike price of $19.89 per share.

Does he really deserve this sort of payout? I suppose there's an argument to be made. As fellow Fool Jeremy MacNealy points out here, the forthcoming edition of Take-Two's Grand Theft Auto, made possible by prudent internal investments made during Winters' reign, could result in big revenue gains that, in turn, could push the stock sharply higher.

Then again, Winters has been the CFO at Take-Two since February 2002. That puts him right in the middle of a formal SEC probe into stock options backdating at the firm. We won't know whether he's involved in orchestrating shenanigans till the Feds complete their investigation.

But it's almost as troubling if he isn't involved in the scam. At the very least, Take-Two has suffered through years of financial engineering that saw onetime chief Ryan Brant plead guilty to falsifying business records. The scam apparently took place from 1997 to 2003, which overlaps with a portion of Winters' tenure. Where was he when shareholders needed him most?

My point, simply, is that we don't really know what Winters knew and when he knew it. Pre-emptively paying him almost $900,000 in cash to leave the firm is at best stupid and at worst criminal.

That's all for this week. Think you've found a late filing we Fools should see? Let me know.

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Fool contributor Tim Beyers, who is ranked 1,306 out of more than 27,000 in our Motley Fool CAPS investor intelligence database, usually favors two scoops of ice cream over the inside scoop. Tim didn't own shares in any of the companies mentioned in this article at the time of publication. All of his portfolio holdings can be found at Tim's Fool profile. His thoughts on SEC filings, Foolishness, and investing in general may be found in his blog. The Motley Fool's disclosure policy may be filed under "F" for fair, or Foolish.