Backdating charge grant option stock
“Accordingly, the company’s finance department, which had been directly appraised of the option, should have taken the compensation charge. Schroeder believes that the finance department’s failure to do so was inadvertent.” After the backdating scandal erupted nationwide in March 2006, more than 270 companies launched internal reviews on stock-option grants or faced SEC and Justice Department investigations, including dozens in Silicon Valley.Schroeder is among 11 valley executives to face SEC charges, including executives at Apple, Brocade, Mc Afee and Mercury Interactive.“Our investigation is ongoing,” said the SEC’s Fogel, who said he would not rule out charges against other former executives.For the time being, at least, the heat in the KLA-Tencor case is focused squarely on Schroeder, 61, who ascended to CEO and director during a 22-year career with the company.“All of his behavior is consistent with his belief that nothing was wrong.” And countering SEC claims that backdated options gave him a head start to profits worth “millions of dollars,” Schroeder said he did not exercise any tainted options granted to him as CEO, though he did pocket about ,000 from mispriced options granted before he was promoted.Marc Fogel, associate regional director for the SEC, challenges the defense that Schroeder inherited a flawed granting process.
Contact Mark Schwanhausser at [email protected] (408) 920-5543.
In October 2001, while Schroeder was CEO, one backdated grant created more than 5 million in potential paper profits for scores of employees.
The biggest beneficiary was Schroeder, with more than .4 million in paper gains, the SEC said.
The SEC says Schroeder should have known better based on the earlier March 2001 e-mail from Nichols, the company’s general counsel.
Schroeder’s attorney Weiss countered that the SEC “misunderstood or distorted the e-mail exchange” with Nichols, saying Schroeder’s “immediately involved and sought advice” from the chief financial officer, who also received the memo. Schroeder was led to believe that the general counsel’s concerns had been addressed,” Weiss said in an e-mail.