Options backdating ousts leaders of 2 firms

Plugged In

October 12, 2006|By San Jose Mercury News

SAN JOSE, Calif. -- McAfee's chairman and chief executive as well as its president will step down after revelations of stock-option backdating, the security software company said yesterday.

Chairman and CEO George Samenuk will retire, while President Kevin Weiss was fired by the board.

"The board has had to make some very difficult decisions, in the last 24 hours, but we believe they were in the best interests of the McAfee shareholders," said McAfee board member Dale L. Fuller in a conference call with financial analysts yesterday.

Fuller, former CEO and president of Borland software, will become McAfee's interim CEO and president.

A similar review at online media company CNet Networks Inc., of San Francisco, led yesterday to the resignation of co-founder and chief executive Shelby Bonnie who has been running the company for six years.

The three executives are the latest casualties in a scandal that has ensnared more than 120 U.S. companies, about one-fourth of them in Silicon Valley. The scandals have prompted internal reviews by companies, along with investigations by the Securities and Exchange Commission and Justice Department.

Backdating involves changing the dates on the paperwork on options to a day when stock prices were lower, giving recipients a better chance for quick paper profits. Many companies under investigation have warned that they will need to restate past financial reports because option abuses led them to overstate their profits.

McAfee, based in Santa Clara, Calif., said it would have to restate $100 million to $150 million in earnings over the last 10 years.

Fuller spent much of Tuesday night and the early-morning hours yesterday breaking the news to McAfee senior managers around the world.

"I don't believe that we'll have any disruption of business," he told analysts.

The Associated Press contributed to this article.

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