Comverse CEO, 2 Other Execs Resign
Monday May 1, 4:43 pm ET
By Peter Svensson, AP Technology Writer
Comverse CEO, 2 Other Executives Resign Amid Stock-Options Probe
NEW YORK (AP) -- The chief executive at Comverse Technology Inc., a maker of telecommunications systems and software, resigned Monday along with two other executives amid a company probe into the timing of stock-option grants.
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The New York-based company had earlier found that the strike prices of some grants were set on dates that differed from the recorded dates.
Employee stock options are usually priced depending on the stock price on the day of the grant. If the stock price is low that day and then rebounds, the options become more valuable.
Findings of suspicious option-timing led to the resignation of the top three executives at software company Mercury Interactive Corp. At UnitedHealth Group Inc., a committee is looking into option grants to its CEO, made on the best possible days of 1997, 1999, and 2000.
"This is clearly a widespread issue," said Scott Sutherland, analyst at Wedbush Morgan in Los Angeles.
The resignations come two weeks after Comverse said it would delay filing its 2005 annual report and expected to restate results back to 2001 due to issues stemming from the timing of stock-option grants. In a statement Monday, Comverse said the departing executives will cooperate with a special board committee that is reviewing the grants.
Founder Kobi Alexander stepped down from his roles as chairman and CEO, while David Kreinberg resigned as chief financial officer. William F. Sorin also resigned from his roles as senior general counsel and corporate secretary. The three former executives will serve as advisers on an interim basis.
Independent director Raz Alon was named interim CEO. Avi T. Aronovitz, vice president of finance and treasurer, was appointed interim CFO, and independent director Ron Hiram assumes the role of non-executive chairman. Paul L. Robinson, vice president of legal and general counsel, will become executive vice president, chief administrative officer, general counsel and corporate secretary.
"The good news is that they're a step closer to putting this behind them," Sutherland said. He said the company has strong financial performance and a good position in industry, and should be able to weather the options issue.
Comverse shares rose $1, or 4.4 percent, to close at $23.65 on the Nasdaq Stock Market. The stock is still down from a 52-week high of $29.64 set just before the company announced the accounting probe.
Alexander, Kreinberg and Sorin also stepped down from their board and committee positions with Verint Systems Inc., most of which is owned by Comverse.
In a March 18 article, The Wall Street Journal highlighted an "unusual pattern" of stock options grants to Kobi Alexander, the company's chief executive. In eight instances between 1994 and 2001, according to the article, options were granted at or close to the shares' lowest price in prior months. According to the newspaper, the odds of such dates being accidental are about 1 in 6 billion. |
