Unnamed Exec Resigns over Option Finding

An internal Sanmina-SCI Corp. probe found that most option grants issued by the company to executives and other employees between 1997 and 2006 were dated incorrectly.

Without identifying the individuals, Sanmina-SCI Corp. said an internal probe into its stock options practices unearthed “concerns regarding the actions of a former and a current member of management” and that company had accepted the resignation of the current manager.

The two were “involved in the authorization, recording, and reporting of stock option grants,” according to the company.

Conducted by a special committee of the company, the investigation found that most option grants to executives and other employees between 1997 and 2006 were neither dated correctly nor accounted, for the provider of electronics manufacturing services reported in a press release. The lapses will require the company to restate its historical financial results and record non-cash compensation charges.

The company said it’s continuing to cooperate with the United States Attorney’s Office for the Northern District of California’s grand jury subpoena for documents relating to the company’s past option practices. Similarly, it says it’s responding to the Securities and Exchange Commission in its requests for documents in connection with the SEC’s informal inquiry into the company.

Sanmina’s special committee also immediately took several actions to remediate “weaknesses in the company’s internal controls over its stock administration practices,” according to the company. Those controls shortcomings led to the incorrect dating and accounting, it said.

The actions the committee took include setting fixed grant dates for all stock-based awards; barring officers and other identified executives from getting equity-based awards during blackout periods; requiring auditable and verifiable proof of the approval date grants connected to routine new hires, promotions and certain discretionary awards; and requiring compensation committee approval for issuing all other grants.

“I regret that our stock options program was not properly administered in the past and I apologize to our stockholders, employees, and customers for any impact or concerns these issues may have caused,” said Sanmina-SCI chief executive officer Jure Sola.

In August, Sanmina-SCI first reported that the special committee found potential discrepancies between the actual dates of measurement used for financial accounting purposes and the recorded grant dates of certain stock option awards.

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