For the first half of the year, Dentsply met the applicable financial performance targets, entitling top executives, including Donald M. Casey, Jr. (“Casey”) and Jorge Gomez (“Gomez”), to the maximum compensation under the 2021 First Half Annual Incentive Plan. As a result of what the Company acknowledged was a “faster recovery” to start the year, Defendant Gomez told investors that “second half ramp is going to be a little bit less than what we thought initially when we modeled 2021.”
In order to ensure that they received at least some of their awards under the 2021 Second Half Annual Incentive Plan, Defendants appear to have orchestrated a scheme to inflate the Company’s revenue and earnings by manipulating the way in which Dentsply recognized revenue tied to certain distributor rebate and incentive programs.
As a result of this scheme, many of the statements Defendants made to investors were materially false or misleading.
The Complaint alleges that, defendants throughout the Class Period made false and/or misleading statements and/or failed to disclose that:
- defendants orchestrated a scheme to inflate Dentsply’s revenue and earnings by manipulating its accounting for a distributor rebate program in order for senior executives to be eligible for significant cash and stock-based incentive compensation;
- in order to facilitate this scheme, Dentsply and its executives made numerous false and misleading statements to investors during the Class Period;
- accordingly, Dentsply’s financial statements were not prepared in accordance with GAAP and SEC rules, and Dentsply’s internal controls over financial reporting were deficient throughout the Class Period; and
- as a result of defendants’ misrepresentations, Dentsply’s common stock traded at artificially inflated prices during the Class Period.