Stock Option Dating is the culprit

Backdating stock options is the financial scandal that has been rocking the TECHNOLOGY firms. The practice already has led to criminal charges against the former chief executives of Brocade Communications Systems Inc. and Comverse Technology Inc.
Backdating is not illegal per se but the proper disclosures are required to inform the investors when stock options were awarded.

Two techonology firms, Apple and E Plus are restating their financial statements because of the stock options-related accounting practices.

Excerpt of the news:


EPlus Finds Problems in Stock Option Accounting
Herndon Firm Is Latest Affected


EPlus Inc., a maker of business software in Herndon, announced yesterday that it would restate its financial results for the past two years because of "incorrect accounting" for stock option awards, as disclosures mounted about questionable compensation practices.

The company said it had uncovered problems with options granted to four senior officers -- chief executive Phillip G. Norton, Executive Vice President Bruce M. Bowen, Treasurer Kleyton L. Parkhurst and Chief Financial Officer Steven J. Mencarini -- after a stockholder flagged the issue with a letter to management in late June.

The audit committee at ePlus expanded its review to cover every stock option awarded since the company's initial public offering a decade ago. The review, which is not yet complete, has found that the "actual measurement dates" for options doled out between 1998 and 2005 "differ from the recorded measurement dates," according to a news release issued yesterday.

In a preliminary estimate, the company predicted that it would record $3 million in compensation expenses because of the problem, not including undisclosed but "significant" costs of the ongoing investigation and of revamping its "inadequate" financial controls. An ePlus spokesman declined to comment yesterday beyond the news release.

The ePlus announcement came the same day that Apple Computer Inc. said it would miss a deadline for filing its quarterly report with the Securities and Exchange Commission because of a continuing review of "irregularities" related to past stock option awards. Apple said it received a letter from the Nasdaq Stock Market formally warning that its failure to file a timely quarterly report with the SEC put the company's shares at risk for possible delistment. Apple said it would request a hearing before Nasdaq's listing panel and that its shares would keep trading on the market pending the panel's decision.

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technology,stock options,Apple,Nasdaq,stock market