Saturday, September 09, 2006

Managing an option investigation

Paul Lippe, Synopsys former general counsel, writing for EDN: (Emphasis added.)

Even if a company engaged in some or all of these practices (backdating, misdating, spring-loading, budget-dodging), it is always better to get the issues on the table quickly and get them resolved.

Manage the business.
The board and the CEO need to be sure that 98 percent to 99 percent of the company’s resources are still focused on products, customers and employees.

Anticipate the rocks.
Once a company runs into problems around option grants, there are a series of predictable bad events that may occur

Manage the investigators.
Despite the sense of crisis and confusion, an investigation is ultimately another business process, and should be held to the same standard as a company’s other business processes, like financial reporting, M&A integration, or hiring.

Be prepared for suitors.
As the Mercury example suggests, one very likely outcome for a serious options problem is acquisition.
Some of the companies fielding options issues questions include: Comverse Technology, Amylin Pharmaceuticals, Brocade Communications Systems Inc., Apple Computer Inc., Atmel Corporation, Rambus Inc. and Semtech Corporation.

Read the excellant article at linked here.

Mr. Lippe is in private practice in the Silicon Valley.

Hat tip to Joe of the Pinehurst Thread for the link.

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