Broadcom co-founder testifies he didn't know backdating stock options was improper [View All]

[Robbien]

Source: LA Times

Henry Samueli, who co-founded Broadcom Corp. in a friend's garage and helped grow it into a leading microchip designer, took the witness stand Tuesday with an equally challenging task at hand: defending the company's backdating of stock options to a federal jury in Orange County.

. . .

Samueli said Broadcom's success was based largely on its highly skilled employees. In order to retain its employees, the company issued them stock options, which swelled in value during the tech boom of the late 1990s.

When the company went public in 1998, more than 70% of its employees became instant millionaires. Options are rights to buy shares of a company's stock at a specific price, usually set at the price on the date they are issued. Backdating stock options to an earlier date, when the stock price was lower, increases their value.

After securities regulators began investigating the practice earlier this decade, many companies were forced to revise their financial reports to reflect the increased option-related expenses.

In 2006, Broadcom had to restate its earnings to reflect $2.2 billion in options-related compensation costs, reducing the company's previously reported financial results.

Read more: http://www.latimes.com/business/la-fi-samueli9-2009dec09,0,3181295.story

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That's his official defense? He didn't know that forging the dates on official documents was wrong. That's what he is going with?