Former Church & Dwight CEO settles proxy disclosure claim

James Craigie, a former CEO, chair and board member of Church & Dwight, has agreed to settle SEC allegations that he violated proxy disclosure rules.

According to the SEC, Craigie stood for election as an independent director without telling the board that he had a close personal friendship with a senior Church & Dwight executive, in doing so causing two of the company’s proxy statements to contain materially misleading statements.

Craigie, who did not admit or deny wrongdoing, agreed to pay a civil penalty of $175,000 and be subject to a five-year officer-and-director bar. The settlement is subject to court approval.

An attorney for Craigie forwarded a statement on behalf of his client: ‘Under Jim Craigie’s leadership, Church & Dwight and its shareholders enjoyed phenomenal growth, including a sixfold increase in market capitalization and industry-leading total shareholder return. Jim is immensely proud of his legacy at [the company] and is pleased to have put this minor matter behind him.’

Church & Dwight did not respond immediately to a request for comment.

Mark Cave, associate director of the SEC’s enforcement division, says in a statement: ‘Shareholders expect independent directors to exercise autonomous judgment in their decision making, free from undisclosed conflicts. By concealing his relationship with a company executive, [Craigie] undermined the board’s director independence process and compromised the company’s disclosures.’

The SEC says Craigie was appointed as Church & Dwight’s CEO in 2004, a role he held until 2015. He was non-executive chair of the company’s board from 2007 to 2019 and a non-independent director from 2004 to 2019 before becoming an independent director in 2019.

From January 1, 2020 through March 17, 2023, Craigie failed to disclose that he had a close personal friendship with an unnamed Church & Dwight executive through the director independence process or otherwise, according to the SEC. The agency says Craigie, his spouse, other friends and the executive and executive’s spouse regularly vacationed together from 2020 through 2023 with Craigie usually paying for airfare and lodging for the executive, their spouse and others on the trips.

According to the SEC’s complaint, Craigie asked the executive not to tell anyone at the company about the nature of their relationship because Craigie wanted to avoid any appearance of bias. ‘Craigie, who had decades of experience as a public company executive and board member, knew, or should have known, that his relationship with [the] executive was relevant and significant to Church & Dwight’s independence determination,’ the agency writes.

Church & Dwight in early 2023 learned of Craigie’s relationship with the executive and its board determined that by not disclosing this relationship, Craigie had violated his obligations of candor and confidentiality under the company’s code of conduct, the SEC says. The board also determined that he was no longer considered an independent director, according to the complaint.

In its 2021 and 2022 proxy statements, the company represented Craigie as an independent director because it was unaware of the relationship with the executive owing to Craigie’s failure to disclose, meaning that those proxy statements contained misstatements of material fact, the SEC says.

The agency states that Craigie is directly liable for those misstatements because he allowed his name to be used in the proxy statements and there is ‘a substantial connection between the use of his name and the solicitation effort.’ It adds that he ‘controlled the content’ of Church & Dwight’s 2021 and 2022 proxy statements in terms of his independence by failing to disclose his relationship with the executive.