Backdating Stock Option Grants
by: wtchdg7 04/20/06 05:50 am
Msg: 178298 of 178301
Vitesse Semiconductor Corp. (VTSS) on April 18 said it has appointed a special committee of independent directors to conduct an internal probe related to past stock option grants, their timing, and any related accounting and documentation. The investigation may lead to the restatement of prior results, Vitesse Semi said.
Also, Chief Executive Louis Tomasetta, Chief Financial Officer Yatin Mody, and Executive Vice President Eugene Hovanec have been placed on administrative leave, the Camarillo, Calif.-based chip company said. Chris Gardner, who served as chief operating officer from 2000 to 2002, has been named acting president and CEO.
Propitious option timing can help build fortunes even at companies where the stock doesn't steadily rise. Shares of Vitesse Semiconductor Corp., although they zoomed in the late 1990s, now rest at about the level of a decade ago. But Louis R. Tomasetta, chief executive of the Camarillo, Calif., chip maker, reaped tens of millions of dollars from stock options.
Mr. Tomasetta got a grant in March 1997 that, adjusted for later stock splits, gave him the right to buy 600,000 shares at $5.625 each. The date they were priced coincided with a steep fall in Vitesse's stock, to what turned out to be its low for the year. He pocketed $23.1 million in profit when he exercised most of these options between 1998 and 2001. Had the grant come 10 days earlier, when the stock price was much stronger, he would have made $1.4 million less. In eight of Mr. Tomasetta's nine option grants from 1994 to 2001, the grants were dated just before double-digit price surges in the next 20 trading days. The odds of such a pattern occurring by chance are about one in 26 billion.
If you are a hold shares of VTSS, you are entitled to make a demand that CEO Thomasetta return his ill-gotten gains to the company for the benefit of its shareholders. For more, email n182005@yahoo.com |
