Corinthian records charge for options
Corinthian Colleges Inc., operator of colleges and training centers in the U.S. and Canada, said Wednesday that it had used incorrect dates to record stock option grants and has taken a $5.7-million charge in its fiscal year ended June 2006.
Santa Ana-based Corinthian said it found no evidence of fraud or willful misconduct in a four-month investigation although it found four cases in fiscal 2001 and 2002 in which “grant dates were selected with benefit of hindsight,” the company said in a statement.
The practice called backdating involved using the wrong dates by taking the lowest stock price in a 30-day period and failing to reflect any difference in that low and a higher stock price in earnings statements, said Trace Urdan, a senior analyst at Signal Hill Capital Group in San Francisco.
Urdan said the charge was minor and encouraging for Corinthian.
“This is actually a really good outcome for the company,” Urdan said. “They are saying it was an honest mistake. They thought they were OK to do it. And the number, $5.7 million over a four-year period, is tiny, nothing in the scheme of things.”
Urdan said Apollo Group Inc., the leader in the for-profit education industry, faced a more serious issue in its stock option dating probe because the Phoenix-based company said it might have used a one-year window to price options, rather than a 30-day window, as Corinthian used.
At least 185 companies have disclosed internal or federal investigations into their stock option grants, and 76 have announced that they must restate previously reported financial results. So far, the restatements, revisions and charges exceed $4.9 billion.
More than 50 executives and directors have left their jobs, and about 300 lawsuits have been filed against more than 90 companies.
In one of the highest-profile cases to date, Bruce Karatz, chairman and chief executive of Los Angeles-based KB Home, resigned last week after an internal probe found that he was involved in incorrectly dating stock option grants for himself and other top managers.
Corinthian said Wednesday that it filed its delayed quarterly and annual reports with regulators and that it expected Nasdaq Stock Market Inc. to cease delisting procedures.
Corinthian enrolled 67,100 students as of Sept. 30 at 94 colleges in 25 states and 33 colleges in seven Canadian provinces.
Corinthian shares rose 33 cents to $12.61 on Wednesday.
