KB Home says the Securities and Exchange Commission has launched an informal inquiry into the company’s stock-option grants. The homebuilder also says it has informed the SEC staff of the status of its own internal review, which is being conducted by members of its audit and compliance committee, as well as outside legal counsel.
The company stresses that it intends to cooperate fully with the SEC inquiry.
On Wednesday, the company confirmed a report in The Wall Street Journal that it is reviewing stock-option grants given to chief executive Bruce Karatz. The newspaper reported that Karatz received nearly $100 million from cashing out options dated when the stock hit what it called “unusual lows,” citing regulatory filings it has reviewed.
KB Home also says that three shareholder derivative suits have been filed in the past two months against the company and certain of its directors and officers. “The suits generally allege breach of fiduciary duty in connection with the company’s stock option grants,” it said in a press release.
KB says it is evaluating the suits and does not intend to comment on them other than through the filing of responses in accordance with applicable court rules.
According to the Associated Press, at least 75 public companies have reported that they are being probed by the Justice Department and/or the SEC for possible manipulation of stock-option grants.
Glass, Lewis estimates that at least 121 companies have disclosed restatements, internal investigations, or government investigations in connection with issues relating to the timing of past stock-option grants.