Broadcom hit with $1.5B charge for backdating
The expenses from backdated stock options has grown from when first noted in July to at least twice as big
Follow @infoworldBroadcom's accounting woes have deepened as the networking chip company examined more stock-option grants that apparently were backdated.
In July, Broadcom said it found irregular stock-option grants made from 2000 to 2002 and expected to take more than $750 million in additional compensation expenses because of those grants. On Friday, the company said it found other questionable stock-option grants awarded between June 1998 and May 2003. Now Broadcom expects those additional compensation expenses to be at least twice as big.
The company also expanded its restatement of past financial results. It had previously expected to restate results for 2000 through the first quarter of 2006, and now it also believes its results for 1998 and 1999 will need to be restated.
Broadcom is one of many high-tech companies to be hit with problems related to backdating of stock options during the heyday of the high-tech economy. In backdating, companies move the date of a stock-option grant to a time when the company's stock was worth less, in order to give the employees a greater gain when they cash in. Apple Computer Inc., Rambus Inc., McAfee Inc. and other companies are embroiled in controversy over apparent backdating.
The audit committee of Broadcom's board of directors is continuing a voluntary review of the Irvine, California, company's compensation practices with the help of outside counsel, and it hasn't reached any conclusions, Broadcom said in a press release on Friday.
Broadcom said it made the grants during a time when it was hard to attract the best high-tech talent and that about 95 percent of the grants went to employees other than executive officers.
