According to the Wall Street Journal, the Dallas technology outsourcer is currently under scrutiny by the Securities and Exchange Commission (SEC) for its options practices, in which it granted stock options to former CEO Jeffrey Rich between 1995 and 2002 that were systematically dated just before the company’s share price was expected to climb, and often at the lowest point of big price dips.
Before Rich left ACS last year, he had raked in more than $60 million from his options. Part of the reason he left with such a rich compensation package was because the timing of the grants, the news report said. According to WSJ, if his six grants had come in at the stock’s average closing price during the year, he would have walked away with 15% less. In its statement, the company did not explain how this happened so frequently, the Journal reported.
The newspaper reported that the pattern by ACS raised questions about whether the grants were backdated or timed to take advantage of the favorable prices.
In a filing to the SEC on Wednesday, the company said it would delay the publication of its quarterly report in order to clear up the process for approving grants for executives by drafting a “historical process.”
The company did say that said the compensation committee of its board of directors would approve the grants through written consent, with “effective dates” that “generally preceded the date” on which all members signed off.
The company’s accounting firm said the date the grant is awarded cannot precede a compensation-committee meeting, The company said chairman Darwin Deason, would “engage, on a relatively contemporaneous basis with the effective date” in phone calls to committee members for verbal approvals of the grants, according to the Journal.