Officers of Ailing EUniverse Hand Back Some Cash
By RiSHAWN BIDDLE
Staff Reporter
The former chairman and chief executive of eUniverse Inc., Brad Greenspan, and several other executives still involved with the scandal-plagued company have handed back part of the salary and bonus money they received before the dot-com marketer disclosed a slew of accounting errors and restated its earnings.
According to a proxy statement filed with the Securities and Exchange Commission earlier this month, Greenspan took a $43,000 cut in his annual $215,000 salary due to his role in the restatements. He also gave back a $42,500 bonus awarded to him in January. Greenspan’s salary had been increased from $185,000 as a reward for the company’s strong performance, which turned out to be based on faulty figures.
In the filing, eUniverse said Greenspan repaid his bonus all in stock, sold back to the company at a price of $2.37 a share. (On Dec. 10, eUniverse’s stock closed at $2.20 a share.)
Company President Brett Brewer repaid his bonus by handing over $11,677 in cash and 8,922 shares and General Counsel Christopher Lipp handed over $18,125, all in cash. Chief Operating Officer Adam Goldenberg repaid most of his $132,000 bonus in cash.
According to the proxy filing, Greenspan, Brewer and Lipp agreed to hand back their bonuses in August, around the time eUniverse announced it had restated $39 million in revenues. Goldenberg later repaid $106,320 of his bonus after it was determined he wouldn’t have been entitled to it under the restated numbers.
Greenspan said he gave back the salary voluntarily before resigning in October to help the company get through cash flow problems. He handed back the bonus, he said, because “it wasn’t earned.”
He did not hand back $55,000 given to him by the company in July 2002, when it cancelled options for several executives. He said the options were not related to quarterly results.
Nevertheless, he said, “I’m more than willing to give back the money.” He didn’t set a specific time when he would do so.
At today’s post-restatement prices, the options would be worthless.
Their strike price was $5 per share, according to the proxy, and in July 2002, when the options were repurchased, the stock ranged in price from a low of $3.85 to a high of $5.98. That quarter was one of the ones whose results were later restated meaning that the stock price was likely trading at artificial levels. (In all, eUniverse spent $472,000 repurchasing the options.)
Company spokesman Jonathan Heit declined to answer questions about whether Brewer or Lipp had been asked to return options payouts.
In May, eUniverse dismissed its auditors and disclosed that it would have to restate revenues for the fiscal year that ended on March 31. The company’s stock was delisted from Nasdaq in August, during a nearly four-month trading hiatus while its finances were being sorted out.
The company has said it has been the subject of an informal SEC probe since May related to the restatements. Greenspan declined to discuss it, citing the agency’s full disclosure rules.
While Greenspan has given up his titles (he will leave the company’s board in January, he said), he still is playing an active role at eUniverse. He took credit for an agreement announced in November with Sharman Networks, the Australian firm that makes Kazaa, the filesharing software accused by record executives of encouraging free music downloads.
EUniverse will operate online gaming and entertainment sites reached exclusively through the Kazaa Media Desktop. To reach Kazaa’s 278 million users, eUniverse will advance $2.3 million to Sharman and hand over 500,000 shares of common stock.
