McAfee Counsel Is Fired in Probe
Security software company McAfee Inc. said Tuesday that it fired its chief lawyer in connection with employee stock option grants while several other companies reported further fallout from an expanding government probe of option practices.
Santa Clara, Calif.-based McAfee said its board dismissed the company’s general counsel, Kent Roberts, after an internal review found that he was involved in an improper option grant episode in 2000.
McAfee is investigating its procedures in granting stock options and said last week that it was engaged in “an informal dialogue” with U.S. securities regulators over grants made in the last decade.
A company spokeswoman said Roberts had been granted options but she declined to elaborate.
Roberts could not be reached for comment.
More than two dozen U.S. companies, mostly in the technology sector, are being investigated by federal prosecutors, the Securities and Exchange Commission or the companies’ boards over the method by which stock options were given to executives.
The probes are looking at so-called backdating and spring-loading of options, although the legal issues that may be involved appear to vary widely.
Backdating involves boosting the value of stock options by resetting their grant dates to coincide with a low point in the market price of the underlying shares.
Spring-loading involves granting options on a date expected to be followed shortly by a strong surge in the price of the underlying shares.
Also Tuesday, microchip equipment maker KLA-Tencor Corp. said the SEC had launched an informal inquiry into its grants. In addition, microchip maker Altera Corp. said it expected additional expenses related to option issues, and Rambus Inc., also a chip-related firm, said it had begun an investigation of past option grants, focusing on options issued in or before 2003. All three firms are based in Silicon Valley.
KLA already had acknowledged receiving subpoenas from federal prosecutors for information relating to its past stock option grants, and had appointed a special committee to conduct an internal investigation.
On Tuesday, the company said it would cooperate with the SEC inquiry.
Altera said it expected as much as several million dollars of additional expenses in the second quarter because of its review of stock option granting practices and related accounting.
McAfee shares fell 51 cents to $23.44 on Tuesday after it announced Roberts’ firing. KLA shares lost 1 cent to $40.61 after its announcement.
Altera shares fell 17 cents to $19.01, and Rambus sank $1.24 to $25.84. Altera and Rambus made their announcements after regular trading ended.
Other companies under government scrutiny for option practices include UnitedHealth Group Inc., Vitesse Semiconductor Corp. and Juniper Networks Inc.
