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Getty Images delays 10-Q filing while committee investigates stock option grants
Getty Images (NYSE: GYI), has announced that its board of directors has formed a special committee to conduct an internal investigation into the Company's stock option grant practices and related accounting in response to an SEC inquiry. According to a press release issued by Getty Images The review is being conducted with the assistance of outside legal counsel retained by the special committee. In addition, Getty Images will delay the filing of its its Form 10-Q quarterly report until the special committee has completed the investigation causing the report to be late.
The Division of Enforcement of the Securities and Exchange Commission (SEC) had notified the Company that it is conducting an informal inquiry into the Company's stock option grant practices, and has requested that the Company provide the SEC with certain information relating to the Company's stock option grant practices. The Company is cooperating fully with the SEC in this informal inquiry.
The SEC has investigated hundreds of publicly traded companies over the last several years to determine whether any back-dating of options has occurred. Stock options are widely used as a form of incentive and compensation, usually for the executives of a corporation. The corporation gives the employee an option to purchase a set number of shares in the company at or below the share price on the date the options are granted. Backdating such options, for example giving a manager options on September 30th when the stock price was $20.00, but dating them on July 30th when the stock price was only $12.00 in order to give that manager an automatic $8.00 per share profit, is considered fraud if the backdating is concealed from the SEC. (Click here for more on Options Backdating).
We should note that while many companies have been investigated by the SEC for possible backdating violations, most have been cleared of any wrong-doing. Getty has set up an internal panel with outside counsel to conduct its own investigation in to its options granting practices.
Click here to view the original press release.
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