KLA-Tencor Forms Committee to Investigate Stock Option Practices

Staff Reporter -- 5/25/2006

KLA-Tencor Corp. announced late Wednesday that it has appointed a special committee of independent directors to conduct an internal investigation relating to past stock options granted to employees during the 1995 to 2001 timeframe.

The move comes after the company had been served by the U.S. Attorney’s office, as reported Monday. In this most recent statement from KLA-Tencor, the company elaborated, saying it has received subpoenas from the U.S. Attorney's Offices for the Eastern District of New York and Northern District of California requesting information relating to its past stock option grants.

KLA-Tencor further disclosed that on May 22 it was served with a complaint relating to a lawsuit filed in the United States District Court for the Northern District of California filed by the Theodore R. Kornreich Revocable Trust, derivatively on behalf of KLA-Tencor.

The special committee is investigating the timing of the grants and related accounting and documentation and will be assisted by outside legal counsel and accounting experts, KLA-Tencor said in its statement.

KLA-Tencor is not the only company being question on its stock option granting practices. This week Merrill Lynch identified a handful of companies – including Marvell, Broadcom and Linear – as top companies that need to take a second look at their stock practices.  Vitesse Semiconductor and Brooks Automation are also facing questions about their stock option practices.  And as recently as Wednesday, Analog Devices Inc. and Maxim Integrated Products  joined the growing number of companies in this group.

KLA-Tencor said it plans to cooperate fully with any government or regulatory investigation into these matters.

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