SafeNet Inc., the Harford County technology company under federal investigation for its stock option grants, has reached settlement agreements with two of its former top executives, according to documents filed late yesterday with the Securities and Exchange Commission.
The executives, Anthony A. Caputo, former chairman and chief executive, and Carole D. Argo, who was president, chief operating officer and acting chief financial officer, resigned in October amid an investigation into the company's stock options.
The agreement with Caputo, which was reached last week, requires that the former CEO put $1.5 million into an escrow account to be collected by the company once certain deadlines have passed. The Argo agreement, also reached last week, requires that she put $100,000 into an escrow account to be collected by the company once certain deadlines have passed, according to SEC documents.
The agreements also call for canceling or increasing the strike, or exercise, price of certain options granted to the former executives between 2000 and 2003.
SafeNet is one of dozens of publicly traded companies that have come under federal investigation for possible illegal backdating of option grants.
The company announced in September that it would have to revise financial statements from 2000 through March 31, 2006, because the accounting of some options grants used "incorrect measurement dates under applicable accounting rules in effect at the time."
The company's internal investigation led to Caputo's and Argo's resignations. SafeNet's previous chief financial officer, Ken Mueller, had resigned about six months earlier. SafeNet said in a recent SEC filing that it repriced options belonging to Caputo, Argo and Mueller.
The options were all repriced higher because they were "determined by the company to have been issued at a discount," that filing said. The changes "were made to mitigate the tax effects of the issuance of discounted options," it said.
Shareholder lawsuits alleging option manipulation have been filed against the company, some naming Caputo as a co-defendant and at least one naming Argo as a co-defendant.
The settlement agreements disclosed yesterday with Caputo and Argo become effective pending approval by the "courts presiding over the derivative actions brought by certain shareholders" against Caputo and Argo, or "the date on which such approval is no longer required."
