The chief executive officer of Flir Systems conceded that the company’s costs associated with backdating stock options will come in about three times higher than previously estimated, according to The Oregonian.
Speaking to analysts on a regularly scheduled conference call, Earl Lewis reportedly pegged the total cost at between $12 million and $16 million. Last fall, reported the newspaper, Lewis said the cost of backdated options may have been understated by as much as $4 million, and the company conceded that some options granted between 1996 and 2001 “likely” violated accounting rules.
During the conference call, Lewis stressed that “it remains my belief that there has been no backdating of options since I assumed responsibility as CEO.” He reportedly added that Flir will not comment further until it completes its internal inquiry.
Flir already faces shareholder lawsuits regarding possible backdating, reported the newspaper.
According to The Oregonian, an investigation in October found “unusually fortunate option grants” to Flir executives in 1996, 1997, and 1998. Several senior executives subsequently faced federal charges of accounting fraud in an unrelated matter, the paper noted; charges were dismissed, but prosecutors are reportedly trying to have them reinstated.
The Oregonian also pointed out that Flir options granted on September 10, 2001, surged in value after the terrorist attacks the following day, when investors correctly anticipated an increase in defense spending on products like those made by Flir.
Those options were immediately exercisable — an unusual feature, noted the newspaper, which added that Flir declined to explain how that grant date was selected.