CA Semiconductor Maker Takes $2.2B Charge for Options Misdating

January 25, 2007 ( - California semiconductor manufacturer Broadcom Corp. revealed it will take a whopping $2.22 billion charge to properly account for misdated stock option grants over eight years.

According to a company statement ,    the charge is so large because Broadcom issued options to purchase nearly 240 million shares to employees from June 1998, the time of the company’s initial stock offering, through May 2003, which the company described as “a period of unprecedented market volatility.”   

The company said that of the options to purchase 232.9 million shares that required a measurement date revision, options covering 9.7 million shares, or 4.2% were awarded to executive officers, and options covering 223.2 million shares, or 95.8% of the shares, were awarded to other employees.

Broadcom is restating its financial reports from 1998 to 2005 to account for the changes. Initial estimates from September 2006 placed the charges at $1.5 billion. The restatement is the largest so far among companies that have looked into their grant practices, according to news reports.  

The company said that neither co-founders Henry Samueli and Henry Nicholas III, nor Chief Executives Alan Ross and Scott McGregor, or any current or former board member were awarded misdated options grants.