Broadcom blasted with $2.2B options charge

By Colleen Taylor -- Electronic News, 1/24/2007

Beleaguered connectivity technology giant Broadcom Corp. has been charged with a painful payback for its stock options misdeeds – a charge of more than $2.2 billion.

Wrapping a months-long probe into its stock options granting practices, Broadcom announced Tuesday that it has filed its amended and delayed 2005 annual and 2006 quarterly reports with the Securities and Exchange Commission (SEC), bringing the company current in its required SEC filings. The filings include restated financial statements with total net additional charges of $2.22 billion for illegally backdated stock option grants—significantly more than the $1.5 billion the company previously projected it would have to pay.

But there is a bright side to the news, particularly for Broadcom's investors: according to the company, because the expense was substantially offset by an identical increase in additional paid-in capital, total shareholders' equity was not materially affected by the restatement.  

The company's top executives can also rest easy: No option grant requiring a measurement date revision was awarded to Broadcom's co-founders, Henry Samueli and Henry T. Nicholas III; either of the CEOs who succeeded Nicholas, Alan E. Ross and Scott A. McGregor; or any current or former member of the company's board.

Broadcom is not the only company facing payback time for backdating issues. RF chipmaker Microtune Inc. similarly filed delayed reports with the SEC this week, which included an $8.5 million compensation charge.