GSA Chief Defends Stock Sale, Charges Smear Effort : Finance: Roger Johnson sold $2 million worth of shares in Irvine computer business he once ran. SEC official says deal’s timing does not appear to violate federal rules.

Complaining that he is the target of a smear campaign by disgruntled Washington insiders, General Services Administration chief Roger Johnson spent much of Friday defending his recent sale of more than $2 million worth of stock in the Irvine computer business he once ran.

The way Johnson sold 184,000 shares of Western Digital Corp. in January and February was questioned in a newspaper report published earlier this week.

Johnson said Friday that his stock dealing, which appears to have earned him at least $1.4 million before taxes, was completely aboveboard.

And a Securities and Exchange Commission official in Los Angeles agreed that its timing does not appear to have violated any federal rules.

Before being appointed GSA administrator, Johnson was chairman of Western Digital. Over the years, the company awarded him stock options--a time-honored form of compensation that ties top managers’ pay to long-term performance. Western Digital periodically gave options to executives instead of cash bonuses or other performance rewards. Holders have the right to buy a certain number of shares at a future date for the then-prevailing market price.

If the price of a stock rose because the company was doing well, the executives would be able to exercise their options, buy the shares for the lower price and immediately sell them at the new market price, pocketing the profit. If the price fell, they could simply let the options expire.

Western Digital normally gives executives three months in which to exercise their options or risk losing them. But SEC rules would have blocked any such sale by Johnson: former chief executive officers of publicly traded firms are prohibited from selling and buying their company’s stock in the first six months after they leave so they cannot take advantage of any potential inside information about a company’s financial condition.

Johnson said that when he submitted his resignation, Western Digital’s board of directors told him they would waive the company’s 90-day rule and give him until March, 1994, to use his options.

“I didn’t ask them for an extension,” Johnson said. “They just gave it to me.”

Western Digital spokesman Robert Blair said Friday that company policy prohibits commenting on the situations of former employees, so he would not respond to Johnson’s statement that he did not ask for the extension of his options.

Financial experts say companies write their own rules about how stock options may be used. And to change the expiration date or the price at which the option may be exercised is not uncommon.

Had he been held to the 90-day rule and free to exercise the options, Johnson would have realized less than $200,000 in profit from the sale of his shares.

But Western Digital shares soared in the next six months, and Johnson, who acquired the stock at prices ranging from $4 to $4.125 a share, sold it during a six-week stretch when it ranged from $12.875 to $15.125 a share.

Johnson sold the shares about seven months after leaving Western Digital.

Johnson charged Friday that the article, published in New York Newsday, was prompted by political enemies who are conducting a campaign to discredit him and derail his efforts to streamline the GSA. He also complained that the article quoted only unidentified sources.

Johnson, a Republican, bolted the party to support Bill Clinton’s presidential bid.