Jabil Circuit can finally put its stock option backdating problems behind it. It announced that a U.S. District Court dismissed with prejudice a class action lawsuit filed against it, its directors and certain current and former officers, and KPMG LLP.
The maker of electronic components for mobile phones and computers note that the suit had arisen as a result of a Wall Street Journal article that related to alleged backdating of stock option grants by certain companies. The court’s order precludes the plaintiffs from filing another amended complaint, the company said, although they may appeal the dismissal within 30 days.
The dismissed suit is separate from the derivative lawsuit settled by Jabil in September 2007. That stemmed from the backdating of stock option grants to certain members of senior management. The settlement did not entail payment of any fines or penalties, the company said at the time, although it agreed to pay the plaintiffs up to $800,000 in attorney’s fees. Jabil also agreed to adopt new policies and procedures to improve the stock-option award process.
In November, Jabil announced that the Securities and Exchange Commission had completed its investigation into the company’s historical stock option granting practices, and did not intend to recommend any enforcement action.
The completion of two independent internal investigations; the prior settlement and dismissal of the derivative actions; the recent recommendation of no enforcement action by the SEC and this class action dismissal seem to indicate that we have reached the end of this trying period for the company,” Jabil president and CEO Timothy Main said in announcing the latest district court dismissal.
In May 2006, Jabil had disclosed that it was the target of derivative and securities class-action lawsuits, and that it had received government inquiries regarding its past stock option grants. A special internal review committee concluded that there was no merit to allegations that the company’s officers, or anyone else, issued themselves backdated stock options or attempted to cause others to issue them, the company noted. In November 2006, however, Jabil said it would need to restate its 2005 financials and related disclosures.