Human Capital & Careers

Marvell Fires General Counsel

Marvell's general counsel was fired before the release of the company's backdating report. The counsel's attorney denies any connection
Alan RappeportMay 8, 2007

Matthew Gloss, the general counsel of Marvell Technologies Group Ltd, was fired prior to the company’s report on an internal review of its stock-options practices, according to a statement from the company.

Gloss’s termination occurred before Marvell released its report. Peter Hillan, a Marvell spokesman, told, “The former general counsel was terminated prior to the special committee’s report. We are unable to discuss the reasons for his termination.”

According to Gloss’s lawyer, his departure had nothing to do with the “option timing problems” at Marvell. “Mr. Gloss had no role in the selection or approval of grant dates, and no knowledge of any effort by others to backdate stock options,” Miles Ehrlich, Gloss’s attorney told in an E-mail.

In its report, the special committee found that on many occasions, the exercise prices of options were below the fair market value on the actual measurement dates. The committee also noted “a systemic failure of internal controls” in the stock-option process, as well as a failure by certain current and former managers to exercise sufficient oversight, resulting in inaccuracies in the company’s books, records, financial statements, and public filings.

The committee reported that several current and former members of management, including Gloss, “bear varying degrees of responsibility” for the deficiencies.

Marvell, a maker of hard-disk drives and microchips, announced yesterday that CFO George Hervey is resigning, to be replaced on an interim basis by corporate controller and treasurer Mike Tate.

Marvell co-founder Weili Dai will no longer serve as executive vice president, chief operating officer, and a director but will stay on as director of strategic marketing and business development, a non-management position. Meanwhile, the committee recommended that president and chief executive officer Sehat Sutardja step down as chairman after finding that he participated in grants with incorrect measurement dates.

Last December, Sutardja, Dai, and Hervey each agreed to have their options repriced. Sutardja also agreed to a reduction of 500,000 pre-split shares that were mistakenly awarded in December 2003, according to the company. Dai also agreed to cancel options to purchase about 1.5 million post-split unvested shares and to limit the ability to exercise vested options.