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RE/MAX’s internal investigation has found that its former CEO David Liniger violated the company’s code of ethics when he gave an undisclosed $2.38 million personal loan to then COO Adam Contos. The nondisclosure, however, was unintentional, a special committee of company-appointed independent directors has found.
RE/MAX has given no indication that either Liniger or Contos will face any sanction for the breach of ethics, according to media reports.
Liniger stepped down as co-CEO of RE/MAX last week. At the time, the company had announced the completion of a nearly 10-month transition to co-CEO Contos. Contos was named the sole CEO of the company last week, a role he will continue to serve in. Liniger will remain with the company as a non-executive chairman on RE/MAX’s Board of Directors.
RE/MAX Holdings Inc. had first announced in November that it was withholding its quarterly earnings report to look into the loan and other undisclosed conduct by Liniger. RE/MAX released its delayed third quarter 2017 earnings on Thursday, along with its fourth-quarter and full-year earning reports.
RE/MAX has maintained that Liniger did not use any company funds in the loan made to Contos. The loan was used by Contos to buy a home at below-market rates.
“Although the loan, gifts, and other transactions between [David and Gail Liniger] and Adam Contos did not involve use of any corporate funds, the special committee concluded that these transactions created an actual or apparent conflict of interest,” Dick Covey, the lead independent director, said in a statement. “This, and the nondisclosure of these personal transactions to the company, violated company policies. The Board accepts that this nondisclosure was unintentional, and Adam has committed to repay the loan as promptly as possible.”
RE/MAX announced in a statement after the investigation that it plans to change its bylaws to limit some powers of the CEO and strengthen the board of directors to prevent such scenarios in the future. The changes, they said, will include enhanced corporate policies and practices related to gifts, conflicts of interest, and workplace conduct, and the reporting of matters.
Source: RE/MAX Holdings Inc. and “RE/MAX Founder Dave Liniger Violated Ethics Code With $2.38M Loan to Executive, Company Finds,” The Denver Post (Feb. 22, 2018)
