December 3, 2004

SEC Enforcement Division Challenging Fishy Timing of Option Grants

In the “Legal Proceedings” section of its 10-K filed Tuesday, Analog Devices disclosed that the SEC’s Enforcement Division was conducting an investigation into the timing of certain option grants: “We have received notice that the SEC is conducting an inquiry into our granting of stock options over the last five years to officers and directors. We believe that other companies have received similar inquiries. Each year, we grant stock options to a broad base of employees (including officers and directors), and in some years those grants have occurred shortly before our issuance of favorable annual financial results.”

Back in March, the Wall Street Journal reported that the SEC was looking into the practice at a number of companies, especially those in technology industry, of granting options shortly before announced positive news.

Combining the SEC’s interest in excessive comp with the recent lawsuit against Fairchild Corp. – in which not only the CEO, but the GC was named in the suit, and which the WSJ called “one of the first of a new wave of Delaware lawsuits challenging excessive pay for corporate leaders” (I will blog more on this suit next week) – you can see why so many are still taking advantage of our “Catch Up” offer to hear all the practical guidance from the video webcast archive of our October 20th conference and all the other practice pointers on It is refreshing to see so many companies signing up their comp committees – catch up today!

Critical Issues for Controlled Companies

If you are at – or do work for – controlled companies, here is a comprehensive interview with Lois Herzeca on Critical Issues for Controlled Companies.

SEC Cleaning House of ’34 Act Filers: Part II

On Wednesday, the SEC instituted public administrative proceedings against 15 companies to determine whether to revoke the registration of their securities under the ’34 Act (the SEC also temporarily suspended trading in the securities of 26 companies). This is the second time the SEC has done this – last time was back in June, so perhaps its a semi-annual housecleaning.

California Department of Corporations Wants Comments

On Wednesday, the California Department of Corporations announced that it is requesting public comment for a study on the effectiveness of the California Corporate Disclosure Act aimed at providing investor protection. In September, Governor Arnold Schwarzenegger directed that the Department to review the efficacy of the Act and make recommendations to eliminate duplicative reporting requirements and further align its provisions with federal reporting requirements.

Comments can be sent to Kathy Womak, Office of Law at Thanks to Keith Bishop for the heads up!