Human Capital & Careers

Emcore Execs Give Back Options Gains

Granting practices were characterized as careless, not willful misconduct.
Stephen TaubNovember 15, 2006

Two top executives of semiconductor products maker Emcore Corp. said they will return gains from exercising stock options after an internal review of the company’s previous grants revealed several improper practices.

Emcore said that company Chief Executive Officer Reuben Richards voluntarily returned $147,775, and Howard Brodie, the company’s chief legal officer, repaid $97,000, “representing the entire benefit received for the misdated grants they exercised.” In addition, the Chief Financial Officer Tom Werthan has not exercised any of those stock option grants and voluntarily surrendered all of his rights to the grants that have been identified as misdated.

“There is no evidence that senior management in any way tampered with or fabricated documents or took other actions consistent with an intent to defraud,” the company stated in a press release. The company also said the investigation found no evidence that the board did not properly exercise oversight duties regarding the stock option plans.

“The special committee stated that it was unable to conclude that the company or anyone involved in the stock option granting process at the company engaged in willful misconduct,” noted the statement. Rather, the company said that the grant process was characterized by “carelessness and inattention” to applicable accounting and disclosure rules and the company failed to maintain adequate controls concerning the issuance of stock options.

In noting that senior management did not seek to profit from the issuance of the option grants at the expense of the company or its shareholders, the company pointed out that senior management received only 12 percent of the options granted. The rest went to the company’s non-senior management employees.

In addition, senior management did not receive any option grants between the October 3, 2001, and the May 18, 2004, grants, the absolute historic low point of Emcore’s market value. Emcore officials also reiterated assertions made in a regulatory filing earlier this month that it expects to record non-cash charges for stock-based compensation expense of roughly $24 million, principally for fiscal years 2000 through 2003.

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