Cablevision Gave Backdated Grant To Dead Official
By PETER GRANT, JAMES BANDLER and CHARLES FORELLE
September 22, 2006; Page A1
Cablevision Systems Corp. awarded options to a vice chairman after his 1999 death but backdated them, making it appear the grant was awarded when he still was alive, according to a company filing and people familiar with the matter.
The country's fifth-largest cable operator in terms of subscribers also improperly awarded a compensation consultant options but accounted for them as if he were an employee, according to a Securities and Exchange Commission filing, citing the results of a six-week investigation by an outside law firm.
The findings of the probe were released yesterday as the Bethpage, N.Y., company restated its financial results and said two of its directors had stepped down from posts on the board's audit and compensation committees as part of an escalating investigation into its improper granting of stock options.
The company also said it had received a grand jury subpoena in connection with an investigation into its options practices from the U.S. Attorney for the Eastern District of New York.
The improprieties regarding the deceased executive -- Vice Chairman Marc Lustgarten, who died in 1999 -- and a compensation consultant are among the more unusual allegations of abuse that have surfaced in the scores of investigations that have been launched this year over improper stock-options practices. About 100 companies are under federal investigation for possibly backdating or otherwise manipulating stock-option grants to secretly boost their value.
Stock options give recipients the right to purchase shares at a fixed exercise price, usually the market price on the day the options were granted. Backdating typically involves pretending the grant was made on an earlier date, when prices were lower, thus increasing the potential value of options.
Cablevision backdated options from 1997 to 2002, according to its SEC filing. In practically all cases the share prices were lower, "sometimes substantially lower," on the option awards than they were on the actual date options were granted, the filing said. "The company's board of directors and senior management believe that the practices...are contrary to the high ethical standards they believe should apply," the filing stated.
Cablevision announced on Aug. 8 that it was launching the options probe, would restate earnings and would delay reporting its results for the second quarter. The company also has said it is under investigation by the SEC as well as the U.S. attorney's office.
http://online.wsj.com/article/SB115884346082669986.html
By PETER GRANT, JAMES BANDLER and CHARLES FORELLE
September 22, 2006; Page A1
Cablevision Systems Corp. awarded options to a vice chairman after his 1999 death but backdated them, making it appear the grant was awarded when he still was alive, according to a company filing and people familiar with the matter.
The country's fifth-largest cable operator in terms of subscribers also improperly awarded a compensation consultant options but accounted for them as if he were an employee, according to a Securities and Exchange Commission filing, citing the results of a six-week investigation by an outside law firm.
The findings of the probe were released yesterday as the Bethpage, N.Y., company restated its financial results and said two of its directors had stepped down from posts on the board's audit and compensation committees as part of an escalating investigation into its improper granting of stock options.
The company also said it had received a grand jury subpoena in connection with an investigation into its options practices from the U.S. Attorney for the Eastern District of New York.
The improprieties regarding the deceased executive -- Vice Chairman Marc Lustgarten, who died in 1999 -- and a compensation consultant are among the more unusual allegations of abuse that have surfaced in the scores of investigations that have been launched this year over improper stock-options practices. About 100 companies are under federal investigation for possibly backdating or otherwise manipulating stock-option grants to secretly boost their value.
Stock options give recipients the right to purchase shares at a fixed exercise price, usually the market price on the day the options were granted. Backdating typically involves pretending the grant was made on an earlier date, when prices were lower, thus increasing the potential value of options.
Cablevision backdated options from 1997 to 2002, according to its SEC filing. In practically all cases the share prices were lower, "sometimes substantially lower," on the option awards than they were on the actual date options were granted, the filing said. "The company's board of directors and senior management believe that the practices...are contrary to the high ethical standards they believe should apply," the filing stated.
Cablevision announced on Aug. 8 that it was launching the options probe, would restate earnings and would delay reporting its results for the second quarter. The company also has said it is under investigation by the SEC as well as the U.S. attorney's office.
http://online.wsj.com/article/SB115884346082669986.html
