Human Capital & Careers

Top Exec Quitting after Options Probe

Witness Systems says it will split the chairman and chief executive posts between two executives.
Stephen TaubDecember 8, 2006

Witness Systems is the latest company to announce that a top executive is leaving in the wake of an internal investigation into its past option-grants practices. The provider of workforce-management software said David Gould has resigned as chairman and chief executive officer.

In a press release issued Thursday reporting the results of a special committee’s investigation of stock-option-granting practices, the company stated that, following the committee’s findings, Gould would “voluntarily” step down as CEO and as a board member on January 3.

At the same time, the company said it would split the posts of chairman and CEO. Dan Lautenbach, who has served on the board since 2002 and is a member of the special committee, was named chairman, and Nicholas Discombe, the company’s president and chief operating officer since April 2003, will replace Gould as CEO and as a board member.

Concerning the investigation, the special committee “did not find fraud or intentional misrepresentation in the financial reporting of the option grants that it analyzed,” according to Witness Systems. But the committee did find inaccuracies in the assignment of measurement dates for option grants that affected the company’s accounting and disclosures. The committee’s report cited “the role of a former financial officer” in granting options during a part of the period of the committee’s probe, according to the company, which noted that no action was taken because the ex-finance officer left the company a few years ago.

Witness Systems stated that it is working with its independent auditors to correct the mistaken measurement dates and other related accounting miscues. It has until January 19 to regain compliance with Nasdaq listing requirements.

“Based on its preliminary analysis, the company does not expect the impact to be materially different from what the company has previously projected,” Witness Systems stated in the press release.