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Juniper faces $900m charge in options scandal

Options grant dates were chosen 'with the benefit of hindsight' as to Juniper's share price
Written by Graeme Wearden, Contributor on

Telecoms equipment vendor Juniper has admitted that it will have to record a charge of almost $1bn to make amends for stock options that it granted in recent years.

On Thursday morning, Juniper announced the results of an internal investigation into its historical stock-option granting practices. This probe uncovered proof that the company had backdated its stock options so employees benefited from lower share prices.

"The company reached a conclusion that the actual measurement dates for financial accounting purposes of numerous stock option grants issued in the past differ from the recorded grant dates of such awards," said Juniper in a statement.

Juniper said it expected to take a $900m (£458m) charge in its next financial results.

The Audit Committee determined that there were numerous instances in which grant dates were chosen "with the benefit of hindsight as to the price of the company's stock, so as to give favourable prices".

Juniper's Audit Committee blamed "certain former management" for this practice. It found that chief executive Scott Kriens had received two stock option awards with measurement date issues. Both options were cancelled, unexercised, in 2001. Juniper said on Thursday that the Audit Committee and the Board of Directors had confidence in Kriens and his senior executives.

This practice of backdating — in which the grant date of an option is moved to coincide with a low point in the value of a company's shares — appears to have been widespread in the dot-com and technology sector. At this stage, it is unclear whether the practice is fraudulent. Around 190 companies, including Dell, Apple and CNET Networks (publisher of ZDNet UK), have conducted, or are conducting, internal inquiries.

Earlier this week, Broadcom, which makes chips, revealed that America's Securities and Exchange Commission is investigating its stock option practices. And in July, civil and criminal charges were filed against several former executives of storage vendor Brocade.

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