IR CEO takes leave of absence as accounting probe deepens

By Colleen Taylor, Contributing Editor -- Electronic News, 8/30/2007

In a surprising move that could indicate the seriousness of its accounting-related troubles, International Rectifier Corp. (IR) today announced that its CEO Alex Lidow has taken a leave of absence.

In April, the El Segundo, Calif.-based power management technology company announced that an internal investigation had discovered accounting irregularities at an unnamed foreign subsidiary, which included, among other things, premature revenue recognition of product sales. According to company filings to the Security and Exchange Commission (SEC), the investigation has since discovered that the faulty sales figures were the result of unsubstantiated orders being entered at the foreign subsidiary, which resulted in the shipment of products and the recording of sales with "no obligation by customers to receive and pay for the products."

Lidow, who is the son of IR's founder Eric Lidow, will continue to receive pay throughout his leave, which the company said is set to extend until the end of the ongoing investigation. According to filings made to the SEC, Lidow received total compensation of more than $1.2 million in 2006. He has been CEO of IR since 1995.

IR was careful to point out that Lidow's leave is by no means an admission of guilt. "The board has determined that this action was in the best interests of the company and no conclusion has been reached by the audit committee that Dr. Lidow has engaged in any wrongful conduct," IR said in the statement released this morning. The company added that Lidow remains a member of the board of directors. Donald R. Dancer, the company's executive VP, general counsel and secretary, has been designated by the board as acting CEO during Lidow's absence.

Lidow is not the first of the company's top brass to seemingly be impacted by the probe. Last month, IR's board of directors fired its executive VP and CFO Michael McGee, while Robert Grant, the company's executive VP of global sales and marketing, resigned. However, at that time, a company spokesman would not confirm or deny to Electronic News that the sudden departures were related to the ongoing accounting investigation.

Thus far, the probe has determined that International Rectifier's financial statements for the past six fiscal quarters cannot be relied upon. IR has also delayed the filing of its quarterly report to the SEC for the period ended March 31.