All top managers of Brixmor Property Group - CEO, president and CFO, and chief accounting officer - along with an accounting employee resigned.
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Brixmor Property Group said that stepping down of CEO Michael Carroll, president and CFO Michael Pappagallo, and Chief Accounting Officer Steven Splain, along with an accounting employee, follows the completion of an Audit Committee review that began after the company received information in late December 2015 through its established compliance processes.
The review led the board to conclude that specific company accounting and financial reporting personnel, in certain instances, were smoothing income items, both up and down, between reporting periods in an effort to achieve consistent quarterly same property net operating income (same property NOI) growth, an industry non-GAAP financial measure.
The company believes the amounts involved were not material to non-GAAP same property NOI or the company's GAAP financial results. The company believes it will not be required to restate historical financial results and that this matter will not impact the company's compliance with the financial covenants in its debt agreements.
Final determinations on these matters remain subject to the completion of the 2015 audit and the filing of the company's Form 10-K. The company believes this does not impact the financial strength or prospects of the company.
John Schreiber, chairman of the Brixmor board, stated, "The Board is disappointed to have learned of the conduct and lack of appropriate management supervision uncovered as a result of the Audit Committee review. Once the facts were known, we moved swiftly to take remedial action.
Michael Berman, chairman of the Brixmor audit committee, stated, "While the board believes this issue does not materially impact our previously reported results, we also believe the integrity of our financial reporting is paramount. We have voluntarily reported this matter to the SEC." ■