They famously excommunicated an analyst from conference calls because he dared to question the company’s use of capital - stock buybacks - for offsetting the dilution from option programs.There’s no small irony in the fact that the company is now going through the options restatement mill.
We're talking top executives at big-name companies like Apple, Altera, Broadcom, Brocade, Cirrus Logic, Comverse, KLA-Tencor, Maxim, Mc Afee, Rambus, Sanmina-SCI, Take Two, Trident, Verisign, and Vitesse. That's serious fallout considering that options backdating is legit as long as the company reports it and accounts for it accurately.
If, for example, the strike price is and the shares now trade at , each option would be worth .
(The options would be worthless if the stock fell to, say, .) Think of options as coupons you can sell.
According to the 8-K, the “restatement adjustments will total .6 million (pre-tax) and relate primarily to (1) stock option grant measurement date errors from December 1996 through February 2001 (.8 million), (2) stock option grant agreement modifications from 1996 to 2002 in connection with the termination of certain employees’ employment (.3 million), and (3) other adjustments (.5 million), principally related to the accounting for the Company’s service award program.” That’s a much different treatment than what the committee initially expected: they had planned on restating for the entire period instead of just one year with a catch-up adjustment.
If “Altera” and “options” in the same sentence ring a bell for you, they should.