Spread of options backdating
“As a result of concerns expressed earlier this year by several analysts, Mr.Kurtz, as audit committee chair, led an independent investigation of stock option practices at both companies.“Whether the SEC finds a problem or a company finds it during their own investigation, it’s still the same problem,” Minow told “I would hope that as soon as the backdating issue arose out of that academic report or United Health [another company named in the survey] case, that every company started an investigation,” she said.The Corporate Library includes the technology company in its table of “51 linked scandal companies sorted by director” by showing that Blue Coat CFO Kevin Royal is a director of both his company and Novellus Systems. He was the CFO at Novellus from 2002 to April 2005, a period after the time that its practices of granting stock options have been questioned, Novellus said in a response to the study that the company E-mailed to on October 25.While Royal joined the company in 1996 and held several financial positions before becoming the finance chief, he never served on the Novellus board. The authors of The Corporate Library study repeatedly use the word “director” in describing the kinds of individuals that are under discussion.
As a result, the company announced in September that it will restate financial results for the 2000–2004 fiscal years and account for the changes as a noncash expense, according to a September press release.The results of the independent investigation concluded that there was no evidence of stock option backdating at either [Redback or PMC Sierra].” Following academic reports released last year that studied option-grant timing, the SEC and the U. Attorney for the Northern District of California requested information on Redback’s practices.According to Redback spokesman Doug Wills, who has not seen The Corporate Library report and did not want to comment on it directly, Redback determined it was implicated in a study by University of Iowa professor Erik Lie because of a mathematical error.Declaring that it “strongly disagrees with the premise and findings of the report,” Novellus noted that Kurtz, its CFO since September 2005, does not sit on the Novellus board but does chair the audit committees of Redback and PMC Sierra.“He is not on the compensation committees of either of these companies, and therefore is not responsible for oversight of the compensation practices at these companies,” Novellus said in the E-mail.