The Walt Disney Co. said today (March 16, 2007) that while stock option awards to some employees of Pixar Animation Studios were backdated, the board's audit committee found, "no one currently associated with the company engaged in any intentional or deliberate acts of misconduct," Disney chairman John E. Pepper said in a statement.
The stock option grants were made to key Pixar employees before Disney acquired the company last year.
Pepper said Disney would follow up on additional income tax liability facing Pixar employees who hold the options and would participate in programs established by the Internal Revenue Service and the state of California to facilitate the payment of those taxes.
The costs associated with remedying the tax issues, "will not be material to the Disney financial statements," Pepper said.
Pixar Animation Studios granted stock options to key execs on four occasions since 1997 on dates that coincided with the company's lowest stock price, company filings show.
Jobs never received any of the options grants from Pixar. They were given to John Lasseter, Ed Catmull and other execs, reports ASSOCIATED PRESS.
Some 203 companies have disclosed SEC, Department of Justice or internal probes into stock options granting practices, according to an ASSOCIATED PRESS review. Backdating -- which occurs when a stock option's exercise price is set at a point lower than the prevailing market price on the date of the grant -- can inflate the recipient's award.
While the manipulation itself isn't illegal, securities laws require that companies properly disclose the practice in their accounting and settle any resulting charges.