White & Case Client Task Force on Stock Option Backdating Launched

New York, August 8, 2006 ... In response to the growing number of investigations by the SEC and federal prosecutors, as well as the IRS, into the practice of backdating of employee stock options, White & Case formed a cross-practice task force to provide assistance to clients who have concerns about their compensation policies or are targeted for investigations. Backdating of options occurs when an earlier date is selected as the official grant-date for an executive or employee receiving the options. Generally, companies that are currently being investigated by authorities had chosen grant dates when their options were below current market value.

"News reports indicate that as many as 2,000 public companies may have backdated stock option grants as a way to sweeten their top executives' pay packages from 1996 to 2005, " said partner Kenneth A. Raskin, head of White & Case's Global Executive Compensation, Benefits and Employment Law practice.  "Companies that fail to properly disclose and properly account for backdating of such grants are subject to investigation. Federal prosecutors also filed charges against two executives at Brocade Communications in San Francisco, alleging the company was overstating its profits as a result of accounting errors connected to backdated options.  Just as clients desperately needed counsel to negotiate the quagmire that was SOX, we think clients will have questions about backdating and their own compensation policies, which is why we formed this task force."

The task force consists of White & Case lawyers from its corporate defense, tax, securities, insurance and executive compensation practices, so that clients can draw on a full range of capabilities whether they need assistance with an ongoing investigation or help conducting an internal audit of their existing policies.

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Reilly Starr
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White & Case LLP
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