News
Getty investigation finds no intentional wrong-doing in backdating of stock options
Today, Getty issued a press-release stating that its recently completed internal investigation into possible violations of SEC regulations concerning the granting of stock options to employees revealed the company had, in fact, issued back-dated options. The release explains that the occurrence resulted from delays between the decision to issue the options and the actual time of issuance, rather than a willful attempt to enrich the recipients illegally. The company will restate prior years’ earnings to correct the financial results for fiscal 2002 and prior years to the tune of $28MM to $32MM.
In November of 2006, Getty images announced that the company had organized an internal investigation of its employee stock option grants. The news came simultaneously with the announcement that the SEC had also initiated an informal investigation into the same matter. Getty says it continues to cooperate fully with the SEC. Today’s announcement seemed to have a slightly positive effect on investors. The company’s stock began the day at $49.49 and finished the day up 1% at $50.00.
Assuming the SEC concurs with Getty’s findings, this could signal an end to nagging issues that have amounted to technicalities but have put a cloud over the company for the last six months. The company has delayed delivering finalized financial reports to the SEC as it awaited the results of the back-dating investigation. A group of creditors claimed the delays, which went beyond established deadlines, amounted to a default in the terms of their loans to the company. In January, Getty attempted to pay-off the creditors by sweetening the terms of the loan for all creditors who would agree to drop the claim of default. In the end, not enough creditors (if any) accepted that offer, and the company made alternative borrowing arrangements which it may use to pay off the disgruntled lenders. Now that Getty has completed this internal investigation, one expects it will submit all the required financial reports to the SEC and, one hopes, management will get past these administrative distractions and dedicate itself to the substantive task of running the company.
Click here to view the original press release.
Posted in: News, Stock Photo Companies
