Posted on 07/13/2006 5:26:12 AM PDT by Brilliant
Barnes & Noble Inc. said its board's audit committee will conduct a review of the company's stock-option practices after a shareholder filed a lawsuit alleging that the New York-based bookseller improperly backdated dozens of options grants to executives.
Federal authorities are investigating the options practices of more than 50 companies to determine whether they backdated or otherwise manipulated grant dates to make them more lucrative. Stock options give employees the right to buy shares in the future at current prices, so retroactively giving executives lower-priced options can translate into significant additional pay for executives.
Barnes & Noble said there was "no merit" to the lawsuit and that "its practices with respect to the issuance of stock options have always been entirely appropriate and in full compliance with all applicable laws and regulations." But the company said it would investigate "as a matter of good corporate governance."
A review of securities filings shows that Barnes & Noble granted stock options to senior executives at monthly lows. One such grant of 700,000 options to Leonard Riggio, its founder and chairman, was dated March 12, 2001, when shares plunged to $23.65. Ten trading days later, Barnes & Noble shares had risen 6%. Another grant of 215,300 options for his brother, the current chief executive, Stephen Riggio, hit the low price for the month of April in 1997.
In a suit filed in New York County Supreme Court, shareholder Timothy Hill asks for the executives to disgorge to the company the stock options and any profits, as well as pay for his attorney's fees. Mary Ellen Keating, a Barnes & Noble spokeswoman, said she couldn't address any specific grants. But she said that the company generally issued options on the same date as its compensation committee approved grants...
(Excerpt) Read more at online.wsj.com ...
Potential bad news for BN booksellers. The BN r percent matching contribution to 401k plans is 100 percent BN stock.
Maybe, but this won't have much of an effect on the financial statements of the issuers. The financial impact will likely be pretty small, especially for the blue-chippers whose stock doesn't fluctuate much intra-month.
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