Accounting & Tax

Getty Restatement Focuses on Backdating

The stock-photo company revealed last month that it has been named in two shareholder derivative lawsuits in connection with backdated stock-option...
Stephen TaubApril 16, 2007

Getty Images will restate results by between $28 million and $32 million after a special committee determined that incorrect measurement dates were used for certain equity compensation awards. Most of the revisions will be applied to 2002 and earlier years.

According to the stock-photo company, the use of incorrect dates was due to a number of reasons, including delays in the approval of awards, the absence of definitive documentation, and modifications of previously awarded grants.

The special committee also identified certain awards for which grant dates were selected retroactively, but the committee stressed that its investigation did not establish any intentional wrongdoing by current employees, officers, or directors.

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Even so, Getty added, it will implement certain governance changes “to ensure reliability, transparency, and accuracy in its equity compensation grant practices and accounting for its equity compensation program.”

Getty will add two independent directors, change the membership of its audit and compensation committees, and discontinue the equity compensation committee. Certain administrative processes and functions will move from human resources to the finance organization, under the supervision of the chief financial officer. Getty will also make a series of changes to its equity compensation grant policy.

In November, Getty disclosed that the Securities and Exchange Commission had launched an informal inquiry into the company’s stock-option practices. And a month ago, the company revealed that it has been named in two shareholder derivative lawsuits in connection with backdated stock-option grants.

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