Backdating Probe Forces Barnes & Noble to Create GC Position
Barnes & Noble Inc. has decided to hire its first general counsel after a special committee found "numerous instances" of improperly dated stock options. According to an April 4 statement, a special committee found instances of backdating at the book retailer, but no evidence of fraudulent activity. Over the past...
April 06, 2007 at 10:06 AM
2 minute read
The original version of this story was published on Law.com
Barnes & Noble Inc. has decided to hire its first general counsel after a special committee found “numerous instances” of improperly dated stock options.
According to an April 4 statement, a special committee found instances of backdating at the book retailer, but no evidence of fraudulent activity. Over the past 10 years, the improperly dated options may have boosted the grants' value by $45.5 million.
The backdated options “were due to a widespread misconception on the part of the company's senior management that the company had some flexibility in the dating of stock option grants,” the company said.
Senior management said that Barnes & Noble's outside counsel gave oral advice supporting management's misconception about the flexibility in dating stock option grants. Bloomberg identified the firm as St. Louis-based Bryan Cave.
“While counsel did not specifically recall giving such advice, counsel informed the special committee that it would have so advised the committee if asked,” the statement said.
The special committee recommended creation of a new executive officer position of general counsel. The company will also retain independent counsel to assist the board in its corporate governance review.
The investigation began in July after a shareholder filed suit challenging the company's stock-options practices. Later in July, the SEC announced it was conducting an informal inquiry into the company's options practices. In August, the U.S. Attorney's Office for the Southern District of New York subpoenaed documents related to the options grants.
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