Comp Consultant to Pay for Backdating - $2 Million - by David McCann and Stephen Taub - cfo.com

dw - This is the first I have heard of this being finalized for any company.  Since we have a good mix of consultants and providers in the ECE I thought it might be a good discussion for us.  What are your thoughts on this?

Comp Consultant to Pay for Backdating

Harvey Benenson,
former advisor to Cablevision, will be the first to do so. He owes $2
million as part of a $34.4 million settlement in a lawsuit brought by
investors.

David McCann and Stephen Taub
CFO.com | Europe

June 9, 2008

In what appears to be the first case of a compensation consultant
paying a price for a company's stock-option backdating, Harvey
Benenson, CEO of Lyons, Benenson & Co., is among 16 individuals who
will pay a total of $34.4 million to settle a derivative lawsuit
against Cablevision Systems.

Insurance is expected to contribute only $10 million toward the
settlement. The remaining $24.4 million will come from Cablevision
executives and directors and others, including Benenson, who was
alleged in a complaint filed in 2006 to have participated in the
company's options-dating process.

The settlement calls for Benenson to pay Cablevision $2 million over
the next three years at a 6-percent annual interest rate. As collateral
he will put up a mortgage on his home in New York's Long Island town of
Bridgehampton. After the $2 million is paid, Cablevision will forgive
$1 million of an unspecified loan previously given to Benenson. The
debt forgiveness will be subject to federal income tax.

He also agreed to give up his right to $1.5 million that
Cablevision had agreed to pay him when his consulting services were no
longer required.

Benenson referred a call to his attorney, Tom Fleming of Olshan,
Grundman, Frome, Rosenzweig, & Wolosky, who declined comment, as
did Cablevision.

The $24.4 million to be returned to Cablevision will come from a
combination of cash payments, repricing the exercise price of
outstanding options and stock appreciation rights (SARs), return of
outstanding common stock, restricted stock units, options, and SARs,
and surrender of potential contractual claims.

Cablevision chairman Charles Dolan agreed to make a cash payment of
$1 million. His son, chief executive James Dolan, will pay $366,250 to
Cablevision for previously exercised options and will make a separate
$1 million payment as well. The largest cash payment, $2.55 million,
will be made by former general counsel Robert Lemle. The next-highest
payment will be Benenson's.

"This is an extremely satisfying outcome for investors, not only for
the significant financial recovery it represents, but because
individual defendants are contributing more than two-thirds of the
value of the settlement," said Stuart Grant, managing director of law
firm Grant & Eisenhofer, which served as co-lead counsel in the
lawsuit on behalf of plaintiff Teachers Retirement System of Louisiana.

Cablevision said in 2006 that it would restate its financials back
to 1997 over its practices for awarding stock options. The company
acknowledged in its Form 10-Q dates September 21, 2006, that the date
and exercise price assigned stock options and SARs from 1997 to 2002
did not correspond to the actual grant date and the closing price of
the company's common stock on that day.

However, Cablevision noted in its regulatory filing last Thursday
that none of the current and former officers, directors, or other
defendants who entered into the settlement agreement has acknowledged
any liability or wrongdoing. It also noted that plaintiffs' counsel is
seeking more than $7 million in fees and expenses from the settlement
proceeds.

Among the more interesting allegations in the derivative lawsuit
was that Cablevision had awarded stock options to a deceased executive,
after his death, and backdated them to make it appear that the grants
had been made while he was alive.