A feud between Atmel and its former CEO George Perlegos took a more serious turn when an extensive inquiry concluded that Perleglos was involved in the intentional backdating of stock options.
Atmel said it expects to record non-cash compensation expenses of $125m for the period from 1993 through 2005. It said the company’s audit committee believed the evidence raised serious concerns regarding George Perlegos’s management integrity with respect to the stock option process.
Company founder Perlegos, his brother and executive vice president Gust Perlegos, and two other unnamed officers, were all fired in August 2006 following an independent investigation into allegations regarding the misuse of corporate travel funds.
He is currently fighting back and is seeking to persuade shareholders to back his plans to replace the board members who ousted him with five highly qualified and independent nominees.
The Atmel statement said the individuals who were primarily responsible for directing the backdating of stock options were George Perlegos and former general counsel Mike Ross, who it revealed was one of the employees whose employment was terminated over the misuse of corporate travel funds. It said neither Perlegos or Ross co-operated with the inquiry.
Atmel said Perlegos was aware of, and often directed, the backdating of stock-option grants. It said: [The evidence] included handwritten notations from Mr Perlegos expressly directing stock administration employees to use prior board meeting dates for many employees’ stock option grants. The evidence showed that Mr Perlegos circumvented the company’s stock option plan requirements and granting procedures.
However, the inquiry revealed that Perlegos did not hold any backdated stock options, and the evidence did not show that he received a direct personal benefit from the backdating of stock options. But it said there was evidence that Ross, general counsel from 1989 until August 2006, benefited from the receipt of backdated stock options that were not approved by the board of directors. It said he backdated his exercises of his own stock options to dates on which the company’s stock price was at a period low, thereby potentially reducing his tax liability.
Atmel said the evidence included documents that showed that Mr Ross directed numerous changes to stock-option lists many months after the lists were approved by the board of directors, without the board’s knowledge or approval.