Nathan Sarkisian has retired a few months earlier than expected as finance chief of Altera Corp. In a separate announcement, the company said on Monday that it had completed a review of its past stock option practices and related accounting matters that found seven mismatches between recorded and actual grant dates.
In March, the maker of microchips announced that Sarkisian intended to retire “by the end of 2006,” according to an Altera release. Earlier, in 2005, he had become embroiled in a controversial dispute with an analyst to whom he ultimately issued a public apology; the analyst had recently stopped covering the company after its management decided to no longer talk to him.
The analyst had been critical of Altera’s share-buyback program, which was intended to offset stock options issued to stock option costs, according to The New York Times. Since the buybacks tended to be made at much higher rates than those at which options are issued, “the program is the equivalent of buying high and selling low,” the analyst reportedly said.
The company also announced on Monday that James Callas will take over as acting CFO and principal financial and accounting officer. Currently Altera’s controller, he has been employed by the company for nearly 19 years.
Sarkisian joined Altera in 1992 as Corporate Controller. He was appointed CFO in August 1995. Before joining the company, Sarkisian held various accounting and financial positions at Fairchild and at Schlumberger Ltd.
In May, Altera had reported that its stock option grant practices were being reviewed by the Securities and Exchange Commission and the U.S. Attorney in Northern California. The company disclosed in the following month that it would restate its financials for the past 10 years to correct errors related to accounting for stock-based compensation costs.
The restatement stemmed from an internal probe that found the actual measurement dates for certain stock option grants issued between 1996 and 2000 differed from their recorded grant dates, the company said at the time.
On Monday, Altera said it expects the restatements to total $47.6 million on a pre-tax basis and be linked mainly to measurement date errors concerning stock option grants made from December 1996 through February 2001l grant-agreement changes made from 1996 to 2002 in connection with employee terminations; and other adjustments mainly tied to the accounting for the company’s service award program.
From December 1996 to February 2001, there were seven occasions on which the recorded grant dates for certain option grants differed from the actual grant dates. “None of these grants was made to the company’s current CEO,” according to Altera.
From 1996 to 2000, Altera granted stock options in December of each year to senior management, including the former CEO and former general counsel, as part of their annual reviews.
“The compensation committee delegated authority to our former CEO to select the grant date for the grants to our former CEO and his staff so that it would coincide with the completion of the December Focal and the CEO’s approval of stock option grants to members of senior management other than the CEO and executive officers,” according to the press release. “Instead of granting options on the date intended by the compensation committee, our former CEO and former General Counsel chose as the grant date the date with the lowest closing price in December.”