ComScore Promises Compliance Reform

Compliance officers looking for a new adventure may want to keep one eye on comScore. The accountingly challenged data analytics company just settled long-running shareholder litigation with promises to beef up its compliance operations.

Based in Virginia, comScore measures audience engagement for websites, TV, and other media. Its internal control over financial reporting, however, has been a mess. The company last filed audited financial statements with the Securities and Exchange Commission three years ago, and the most recent financial filings posted to comScore’s website are dated from 2011.

You can imagine the shareholder unhappiness that ensued. Investors called shenanigans on financial statements that presented non-cash, barter transactions as revenue. They also complained about (now former) senior executives selling comScore stock while foisting those funny numbers onto the public.

Anyway, the many lawsuits that flew forth from that fine fiasco finally found a more fruitful fate. All parties reached a tentative settlement last week (pending final court approval in June) that includes, among other things, the naming of a new chief compliance officer and enhanced attention to internal controls.

ComScore also promised to create a corporate compliance committee and to overhaul the charter of the audit committee. And given the long list of oversight duties the board now promises to fulfill, I strongly suspect comScore will be spending more money on compliance technology as well. All you GRC vendors reading this might want to start looking up the company on LinkedIn.

The chief compliance officer will report directly to comScore’s CEO and the chairman of the audit committee (fist pump for independence!), and his or her duties will include…

• Overseeing and administering comScore’s compliance program, including corporate governance and the Code of Business Conduct and Ethics;;
• chairing the corporate compliance committee;
• fostering a culture that integrates compliance and ethics into business processes and practices through educational awareness and training;
• maintaining accurate public and internal disclosures; and
• reporting and investigating potential compliance and ethics concerns.

The CCO will also provide reports to the audit committee at least quarterly on the company’s adventures in compliance and ethics, and an annual written report that outlines the company’s overall compliance posture as well.

The proposed settlement also includes a raft of changes at the board level: updated charters for the audit, compensation, and nominating & governance committee; new policies on related-party transactions, clawbacks, political spending, and whistleblower protection; amendments to company separation contracts, and lots more.

But Then There’s the Business…

Meanwhile, comScore itself is not doing too well these days. It took a bailout from hedge fund Starboard Ventures over the winter for $135 million in cash and stock, to keep operations going while executives tried to right the floundering ship. It laid off 10 percent of employees in December and reportedly is working with Goldman Sachs to find a buyer. If that doesn’t succeed, Starboard gets control of the board, and lord knows what happens next.

ComScore was delisted from Nasdaq in 2017 and now trades over the counter. Its stock price was hovering around $25 per share this week. That’s less than half its value in 2015, but still impressive when you consider we haven’t seen audited statements in three years. (The Washington Business Journal has excellent coverage of comScore’s woes if you want the full backstory.)

To be sure, then, the compliance officer job that may be forthcoming here won’t be for the faint of heart. But as I said, if you’re looking for a new challenge, comScore certainly sounds like it’s in a challenging position.