McAfee, Intuit Face U.S. Probes on Options
Questions about improperly dated stock options widened Friday as Bay Area software makers McAfee Inc. and Intuit Inc. said their option practices were being investigated by the federal government.
Media reports about the spreading probe prompted the California Public Employees’ Retirement System to demand that 25 companies, including UnitedHealth Group Inc. and Comverse Technology Inc., start investigations into whether they backdated stock options granted to top executives.
The nation’s largest pension fund, with more than $210 billion in assets, said the companies should disclose any findings to the public.
“Stock option backdating potentially threatens the credibility, governance and performance of companies,” Russell Read, the new CalPERS chief investment officer, said in a statement. “We hope the SEC will continue to investigate because it imperils the creation and sustainability of long-term value for share owners.”
Santa Clara, Calif.-based McAfee, which makes anti-virus software, said that it had received a subpoena for documents and that it would cooperate with the Securities and Exchange Commission. A company spokeswoman declined to comment further.
The company fired its general counsel May 30 after discovering improperly granted options.
Intuit, whose products include TurboTax software, said the SEC had begun an informal inquiry into the company’s stock option practices. Intuit, based in Mountain View, Calif., said it was contacted after it had formed a special directors committee to review option grants.
“We have not found anything material to date,” spokesman Harry Pforzheimer said, adding that the company believed that its practices were sound.
About 40 companies in three countries have disclosed federal or internal inquiries into option grants. At least 15 people have resigned or been fired, and more than 50 lawsuits are pending at more than 20 companies.
Investigators are looking at whether grants of options were illegally backdated or manipulated to coincide with low stock prices, which would make the options more valuable to executives who received them.
