Mercury Reports Options Misdeeds
Mercury Interactive Corp., which makes software to test computer programs, said Monday that it had found 54 intentional acts of backdating options from 1994 to March 31, 2005, to inflate senior executives’ compensation.
Mercury’s former senior management “deliberately” overrode controls to prevent backdating, the Mountain View, Calif.-based company said in a regulatory filing.
The filing said directors Igal Kohavi, Yair Shamir and Giora Yaron received so-called Wells notices from the Securities and Exchange Commission on June 23 warning that the agency might seek to permanently bar them from the boards of public companies. The SEC is considering complaints alleging that each director knew or should have known about the manipulation of option grant dates.
Mercury also restated net income lower for the years 2004, 2003, 2002 and 2000 and restated it higher for 2001.
The company is among at least 60 under scrutiny by the SEC, the Justice Department or internal investigations into the manipulation of option dates, in the biggest probe of corporate wrongdoing since the investigation into illegal mutual fund trading that began almost three years ago.
Mercury’s board on June 9 canceled 2.63 million stock options issued to former Chief Executive Amnon Landan after a company probe found he had altered prices. Landan and two other senior executives quit in November when an internal investigation found they manipulated stock-option values for six years. A special committee of the board urged that legal action be pursued against the executives, a June 9 regulatory filing said.
Mercury announced Monday’s news after the close of regular trading, where its shares added 63 cents to $35.60. Its shares were little changed in extended trading.
Also Monday, Maxim Integrated Products Inc. and Zoran Corp., makers of semiconductors for consumer electronics, received subpoenas from the U.S. attorney in Northern California related to their practice of granting stock options.
A special committee of directors at Maxim has also begun an internal inquiry, the Sunnyvale, Calif.-based company said. It is cooperating with an SEC request last month for options-related data and has hired outside legal counsel to help with the internal probe, the company said.
The U.S. attorney requested Zoran documents dating to 1995, the company said.
Maxim shares gained 14 cents to $32.25. Zoran’s shares fell 3 cents to $24.31.
