Bed Bath & Beyond named in backdating lawsuit
October 27, 2006,
New York – Caught up in a nationwide scrutiny of corporate backdating of stock options, Bed Bath & Beyond is being sued by a New York law firm which charges that some officers and directors of the retailer manipulated the price of options handed out to executives, violating New York state laws, possibly federal laws, and the company's own stock option plan.
Stull, Stull & Brody said its complaint charges, "Certain current and prior officers and directors manipulated the prices of executive and director stock option grants." That practice of granting options "at artificially low prices is alleged to violate the company's internal documents, such as the company's stock option plan, as well as state laws governing officer and director fiduciary duties and/or federal laws governing securities and taxation."
Earlier this month, an internal Bed Bath & Beyond investigation by a special committee of directors found 44 examples of backdating option grants since the retailer became a public company in 1992. As a result, the company said it will take an $8 million charge against profits during the third quarter, and reclassify about $66 million in the equity section of its balance when it files its annual report. The SEC was to begin an "informal inquiry."
The special committee also gave a pass to co-founders Warren Eisenberg and Leonard Feinstein, as well as ceo Steven Temares. Even though they set the dates for the option grants, the committee said it found no evidence of "willful misconduct."
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