Like many other publicly traded companies, semiconductor maker LSI Logic Corp. awarded stock options to executives at regular planned intervals, a practice that leaves no room for improperly backdating options.
From 1997 to 2001, the company gave out regular executive grants in August and November, and occasionally in February.
But in February 2002, the company told the SEC that it had deviated from that practice the previous April, when it granted CEO Wilfred Corrigan an option to buy 1.5 million shares at the April 2 price.
The company had seen a long and painful descent in its stock price -- one that prompted executives to voluntarily take a 10 percent salary cut. The April 2 grant date came near the bottom. The stock was trading at $14.94 that day, then dropped to $13.97 two days later before climbing and cresting above $21 by month's end (see LSI chart showing company stock price from August 2000 through July 2001).
It was unusual for executives to receive stock options in April. That was the time of year that LSI board members -- including Larry Sonsini of Wilson Sonsini Goodrich & Rosati -- typically received their options. On that April 2, Sonsini and his law firm were awarded options to buy 10,000 shares of LSI stock.
In an e-mail last week, an LSI spokeswoman said the company has voluntarily reviewed its option grants.
"The review covered the period of 1995 to 2005, and was completed by the company's internal audit group," she added. "No instances of backdating or other improprieties were found. LSI Logic has not been contacted by the SEC, or any other governmental agency, regarding its stock option practices."
SEC filings from two other companies where Sonsini was a board member -- Echelon Corp. and Lattice Semiconductor Corp. -- reveal stock option grants to executives at exceptionally low levels.
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