US - The California Public Employees' Retirement System (CalPERS) has withdrawn its employee stock option backdating inquiry to Nvidia.
CalPERS had earlier called on 25 companies to respond to allegations of stock option backdating practices, and even questioned a lack of oversight by those companies’ board of directors. But yesterday the fund confirmed it had removed the graphics processor company from the list .
“CalPERS has been informed by representatives of Nvidia Corp. that they are unaware of any regulatory or other investigations of stock option backdating at the company,” the fund said in a release.
Stock option backdating allows executives to backdate stock purchase options to secure the lowest possible market price, thus maximising potential profits regardless of performance.
CalPERS global equity senior investment officer Christianna Wood said the allegations raised concerns about a lack of oversight by the board of directors, weak internal controls, weak internal and external audit practices, and poor accounting and the possibility of civil and criminal penalties against these companies.
Iowa Sen. Chuck Grassley, also chairman of the Committee on Finance, yesterday added his voice to the debate surrounding the backdating of stock options.
It’s one thing for an executive to make big profits because he’s improved his company, but it’s a whole different thing to make big profits because he’s playing fast and loose with the dating of stock options,” said Grassley.
“It’s also troubling that boards of directors are apparently approving these deals without shareholder approval,” said Grassley, who called on the Justice Department and the Securities and Exchange Commission to take “a hard look” at the practice.
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