Human Capital & Careers

VeriSign to Restate Due to Options Grants

Corinthian Colleges also discloses options-granting problems.
Stephen TaubNovember 22, 2006

VeriSign Inc. says it will restate its financial statements for the five years ending in 2005 and for the first quarter of 2006 as a result of an internal inquiry into previous stock-option grants. The Internet software company elaborates that it will take as much as a $250 million noncash, stock-based compensation expense to incorrect measurement dates and other administrative inconsistencies related to certain stock-option grant dates and prices.

Officials stress the company still has not determined the amount of additional noncash stock-based compensation expense to be recorded in any specific period or in any future period and the resulting tax and accounting impact, according to regulatory filings. VeriSign also says an ad hoc group of independent directors expects to complete its review of company stock-option granting practices by the end of the year.

In June VeriSign reported it received an informal inquiry from the Securities and Exchange Commission asking for documents related to stock options. At the time, officials assured investors the company intended to cooperate fully.

Meanwhile, on Wednesday, Corinthian Colleges said an internal review determined it had unrecorded noncash equity-based compensation charges of about $5.7 million related to option grants made in 2001 and 2002 after determining that the appropriate measurement date for accounting purposes differed from the measurement date used by the company. The for-profit education provider added that on four occasions, the company’s board or compensation committee approved stock-option grants to be made within 30 days following the board or committee meeting. In each of those cases, the grants were made at the low closing price of the company’s common stock during the 30-day period, and each of the grant dates was selected “with the benefit of hindsight,” said the company filing. In addition, the company said it identified several other occasions in which the original grant date differed from the appropriate measurement date as a result of contingencies, errors, administrative delays, or discrepancies.