Opinion ID: 8414535
Heading Depth: 4
Heading Rank: 3

Heading: Effect of Related-Party Transactions on Aéropostale

Text: In addition to the testimony regarding Finazzo’s steering of business to South Bay, several witnesses testified about the effect of these related-party transactions on Aéropostale’s business. CFO Cunningham testified that it was important for Aéropostale to know about all related-party transactions involving Aé-ropostale employees. He explained that “if the employee is receiving a benefit [from a vendor] and if that employee is also involved in transacting business with that vendor, the prices that we pay may not be the best price or the fair market value for that product or service.” Dey App’x at 601. Similarly, General Counsel Slezak testified that Aéropostale wanted to know about related-party transactions “because you want to make sure that the company is getting the best possible deal, the best benefit of the bargain.” Id. at 827. CEO Geiger testified that related-party transactions “could easily reduce [Aéropostale’s] profitability and how much money [Aéro-postale] made.” Id. at 1415. Given that Finazzo was on both sides of the transactions between Aéropostale and South Bay, Slezak testified that “[t]here is no way that ... Aéropostale got the benefit of the bargain or got the best market prices or got the best ... engagement with our vendor that we could possibly get.” Id. at 858. He concluded: “Honestly, I felt every penny that [Finazzo] ever got from South Bay should have been ours.” Id. Similarly, Geiger testified that Finazzo profiting from South Bay-related vendors “would directly diminish Aéropostale’s ability to maximize its profits because monies were going elsewhere that could have gone to the company.” Id. at 1418. He concluded that “any profits that [Finazzo] would have gotten, in my mind, would have [otherwise] accrued to the company[,] increasing its profitability, the value to the shareholders!,] and made Aéropostale stronger.” Id. at 1423.