Backdating and misdating of options continues to exact a heavy toll on the executive suite. On Tuesday alone, both Sapient and KLA-Tencor lost executives or directors in actions that appeared related to internal investigations at both companies.
Sapient announced that Jerry A. Greenberg resigned as co-chairman and chief executive officer, and that Sue Cooke resigned as interim chief financial officer.
The business and technology consulting services company also said it will amend prior period financial statements. It pointed out that although an internal investigation is not yet complete, its audit committee has identified option grants that had incorrect measurement dates and were not appropriately accounted for. These options were awarded principally during the period from 1997 through 2001.
In a statement, Jeffrey M. Cunningham, an independent director who was named chairman of the board, said: “Although our previously announced internal investigation into Sapient’s stock-based compensation practices is not yet completed, Jerry and the board came to the conclusion that, based on the information gathered to date, it would be in the best interests of the company and our shareholders to accelerate our CEO succession plan.”
Also on Tuesday, KLA-Tencor announced that Kenneth Levy, founder and chairman of the board, had retired as a director and employee. He had served on the board since 1975, was chairman of the board since 1999, and CEO from 1975 to 1997 and from mid-1998 to mid-1999.
In the same press release, the maker of semiconductor production equipment said that based on an investigation by a special committee of the board of directors, it will re-price all outstanding retroactively priced options held by Levy and certain other former and current executives. The exercise price of each re-priced option will be increased to the fair market value on the corrected measurement date, the company added.
Meanwhile, on Monday, KLA-Tencor’s general counsel Stuart J. Nichols resigned, effective immediately. The company also said it terminated all aspects of its employment relationship with Kenneth L. Schroeder, effective immediately. Schroeder was president and chief operating officer from 1991 to 1999 and CEO and a member of the board of directors from 1999 through 2005.
KLA also said it would take up to $400 million in non-cash charges for stock-based compensation expenses.