Spread of options backdating
“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 plans to clarify that not all of the people listed are directors of all the companies listed, the organization’s co-founder Nell Minow wrote in an E-mail sent to the public relations firm representing Novellus Systems, one of the companies mentioned prominently in the report.Ninety-five percent of the people listed in the report are directors, estimates Paul Hodgson, The Corporate Library’s senior research associate, who worked on the report with two other researchers.
“A self-report from a company exonerating itself from backdating will not remove them from our list (or any of the other lists we have seen of companies with backdating concerns) as long as there is pending litigation,” she wrote.
“We tried to include all CEOs and CFOs in the survey, as in some cases where option backdating did occur it is the CFOs and CEOs who have been forced out, rather than any directors,” he wrote in an E-mail to Controllers and corporate secretaries have also been implicated.” The report, however, never uses the word “officer” when referring to any of the 120 companies it said were “implicated” in the backdating scandal.
Officials of Novellus and Blue Coat criticized The Corporate Library for including them in its list, arguing that regulators haven’t accused them of wrongdoing related to backdating.
Purporting to cover a group of companies with “a total of 1,440 directors,” they discuss such things as “the level of interconnectedness between directors sitting on the boards of companies implicated in the scandal” and “directors who sit on more than one board in the group.” A column in the report’s tables refers to “Director name.” Yet Hodgson disagrees with the contention that the report’s table implies that everyone listed is a director.
The key point of the report is the connections between the high-level people involved in these alleged backdating cases, he asserts.