A day after repricing options, ISSI files settlement details of backdating charges - 8 Apr 2009
A day after repricing options, ISSI files settlement details of backdating charges
Posted by Jack Davis on April 8th, 2009 at 2:33 pm | Categorized as Backdating, Docu-Drama, Integrated Silicon Solution, Mergers and Acquisitions | Tagged as Backdating, Integrated Silicon Solution, Jimmy Lee, Repricings, Shareholder lawsuit, Stock options
A day after repricing underwater options held by a couple hundred of
its employees, Integrated Silicon Solutions filed details Tuesday of a proposed settlement
of a lawsuit against the company and some of its current and past
executives and members of its board over allegations of stock option
backdating.
Although the defendants in the matter — including the company’s
chief executive, Jimmy Lee — deny “each and every allegation” made in
the complaint, they decided to the
settlement in order to “to avoid the continuing additional expense,
inconvenience,and distraction of this burdensome litigation and to
avoid the risks inherent in any lawsuit.”
The shareholder lawsuit, first filed in July 2006, led to the
formation a month later of a special committee of ISSI’s board “to
review its historical stock option practices and related accounting.”
Two months later, the company declared it would need to restate its
financials going all the way back to its initial public offering in
February 1995. The company filed restated results in May 2007, a month
after settlement discussions began between the parties to the lawsuit.
As part of the settlement, CEO Jimmy Lee has “voluntarily” paid the
company $257,329, the difference between the price he paid to exercise
certain misdated options and the price the special committee later
determined they should have had. He also agreed to the repricing of
157,962 unexercised options he held that forfeited $1.2 million of
their value.
Former CFO Fischer settled a complaint filed against him directly by
the SEC by paying the company $414,830, which was his pre-tax gain he
realized exercising improperly priced stock options plus interest.
Two unnamed underlings who helped execute the paperwork related to
the back-dated options also agreed to reprice options on 10,830 shares,
giving up $177,585 in value.
The company also agreed to institute changes in the way options are
granted in the future, including pre-established award dates and steps
to provide greater transparency and immediacy in the paperwork
surrounding them. It also agreed to a provision that would claw back
bonus money paid to an executive who’s actions are found to have
contributed to a restatement of financial results on which the bonus
was based.
Among the other governance reforms called for by the settlement is a
limit on the time directors may serve on the compensation committee to
six years, and a requirement that board members attend the “Director’s
College” held annually by Stanford’s law school, or other similar
programs.
more...http://www.siliconbeat.com/2009/04/08/a-day-after-repricing-options-iss-files-settlement-details-of-backdating-charges/