This article originally appeared on Feb. 1, 2014, on RealMoney.com's Columnist Conversation.
What's more appalling is the company's response, which was inserted at the end of the story after it was published -- almost immediately after I heard from the company.
Here's the question I asked, via email:
I'm working on a piece about how ADT's (ADT) stock has fallen in the wake of its earnings miss -- and its comments that it has "implemented actions" to "regain subscriber traction."
But this is the same company that spent money buying back billions of dollars in stock at prices well above its current price in a share repurchase program that was instituted after Corvex disclosed a 5% stake.
Corvex then went on the board -- and then got bought out at a high price just before this bad news hit.
The obvious question: Why was Corvex given special treatment, and as a board member what did they know prior to selling?
1) The repurchase from Corvex of a large block of ADT common stock (almost 5%) allowed us to retire more than 10mm shares in one transaction at a set price (market price of Nov 22 closing), giving us speed and certainty of execution. This had an immediate beneficial impact on our EPS that was shared by all our shareholders.
2) Buying at the market price was the most fair and cost effective way for ADT to retire a large portion of our stock.