A former vice president of human resources at Broadcom Corp. has agreed to plead guilty to obstruction of justice in connection with a government investigation of options backdating, according to the U.S. Attorney’s Office for the Central District of California.
Nancy Tullos was accused of instructing a subordinate to delete an E-mail that was evidence of option backdating by Broadcom senior executives and board members. In her plea deal, Tullos, who is slated to be arraigned Monday, agreed to cooperate with federal authorities in an ongoing investigation. The obstruction of justice charge carries a maximum penalty of 10 years in federal prison.
When Tullos helped other Broadcom executives recruit an engineer to work for the company in 1999, she ordered the subordinate to backdate his hiring to lock in a lower stock-option strike price, the U.S. Attorney says. When asked in an E-mail about this instruction, Tullos responded: “pls. delete this message,” according to the government.
Broadcom took a $2.259 billion charge in January 2006 to correct for improperly recorded stock options. The semiconductor company concluded that the appropriate measurement dates for most stock options granted from 1998 to 2005 differed from the dates originally used for the grants.
The company placed much of the blame for its options woes on three former executives: CEO Henry Nicholas, CFO William Ruehle, and Tullos.
Tullos’s attorney, Ismail Ramsey, said in a statement at the time: “Ms. Tullos is neither an accountant nor a lawyer. And, as the company acknowledged, she did not herself select any of the favorable grant dates. As an HR executive, everything Nancy did to assist in processing option grants was directed and approved by her superiors and other professionals — whom she trusted and relied upon.”