Administration September 6, 2006

Michael's Is Re-examining Past Stock Options Grants

June 9, 2006 (PLANSPONSOR.com) - Michael's Stores announced in a filing that the audit committee of its board of directors has initiated a review of its past stock-option grants, according to the Wall Street Journal.
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The filing said the investigation will prevent the national crafts retail chain from filing its quarterly report on time, the WSJ reported. The examination focuses on grants from 1990 to 2001, Michael’s said, admitting that it had granted options with prices that “generally preceded the date” and that the company’s board approved the grants.

Michael’s switched to a different filing system after 2001, using “pre-determined effective grant dates.”  The company said the review has not generated any conclusions yet, so it does not know whether it will need to redo its results or pay additional taxes and interest.

Since the end of May 2006, the Justice Department, the Securities and Exchange Commission (SEC), or the Internal Revenue Service (IRS) have begun investigating at least 22 companies for backdating stock op tions for executives (See Stock Option Probe Biggest Since Abusive Fund Trading Cases).

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