Broadcom Internal Probe Finds Backdated Options
An internal investigation by Broadcom Corp into its
stock options grants to employees prompted the company to
announce on Friday that it would restate its financial
results for the past five years and record non-cash
expenses of more than $750 million.
The company said it found no evidence of improper behavior
in the preliminary review, only that for certain option
grants awarded during the years 2000 to 2002, the
allocations to individual recipients and/or formal
corporate approvals had not been completed as of the
original accounting measurement dates, according to a news
release.
The company, which provides semiconductors for wireless
communications, stands next in a long line of technology
companies entangled in a federal stock options probe that
some have likened to the mutual fund trading scandals,
which exploded a few years ago (
Stock Option Probe Biggest Since Abusive Fund Trading
Cases
).
In June, US regulators asked Broadcom for documents related
to how it grants stock options to employees.
No issues have been identified that affect equity awards
issued to Broadcom’s co-founders, CEOs or any member of
the Board of Directors. But about 95% of options awards
granted since 1998 have gone to employees as part of their
compensation packages, according to a release.
According to a release from the company, no equity award
has been identified that was not authorized, or where any
officer or director approved an individual equity award
from which he or she personally benefited.
The company said the additional non-cash stock-based
compensation expense will not affect the company’s
current cash position, financial condition or previously
reported revenues and will be offset by corresponding
increases in additional paid-in capital, leaving
shareholders’ equity unaffected.
The company has decided to restate its financial statements
for the years 2000 to 2005 and for the first quarter
of 2006.