Mercury interactive backdating
Subsequently, the company's CEO and CFO resigned after the probe, which set off a chain of events leading to Mercury's NASDAQ delisting, a 7 million writeoff and announcement of an acquisition by Hewlett-Packard Co.
The Ogilvy PR campaign set out to restore the company's reputation, emphasizing its cooperation with regulators and efforts to straighten out the options problems while highlighting Mercury's continued strong business performance.
Cloud adoption is growing, but how are organizations taking advantage of it?The company’s million settlement, which secured the release of all defendants (including Schroeder), represents the second-largest options backdating-related securities class action settlement.The only larger settlement so far is the 7.5 million Mercury Interactive settlement, which perhaps may be explained as an effort by Mercury’s acquirer, HP, to put the case in the past.On June 29, 2006, the company announced (here) that its Board "had reached a preliminary conclusion that the actual measurement dates for financial accounting purposes of certain stock option grants issued in prior years likely differ from the recorded grant dates of such awards." On October 16, 2006, the company announced (here) that the special committee had completed its investigation, and that as a result of the committee’s conclusions "the company will restate its financial statements to correct the accounting for retroactively priced stock options." The company said that it anticipates that the "additional non-cash charges for stock based compensation expenses will not exceed 0 million." The company also announced that it had terminated "all aspects of its employment relationship" with Kenneth Schroeder, who had been President and COO from 1991 to 1999, and CEO and a director from 1999 to 2005.On June 25, 2007, the SEC announced (here) that it had filed a civil complaint against the company and Schroeder.
The article described how the company’s executives received stock option grants in 2001 on "unusually fortunate days." The article also said that the data the Journal reviewed suggested a "highly improbable pattern of option grants." The company’s shares dropped over ten percent on the news, representing a drop in market capitalization of $935 million.