Sanmina-SCI Discovers 'Potential' Stock Option Granting Errors

Electronics manufacturing services (EMS) provider Sanmina-SCI Corp. today said that based on an internal investigation into its stock option administration practices, “potential discrepancies” have been discovered between the actual dates of measurement used for financial accounting purposes and the recorded grant dates of certain stock option awards.

The company said on June 9 that in response to securities market analyst and media attention regarding its stock option practices, the company initiated an internal inquiry of grants to its executive officers as named in its annual proxy statements.

Sanmina-SCI said it was the company’s practice to grant options to its executive officers at the time of the compensation committee’s annual review, while outside directors receive annual grants effective the first business day of October of each year.

Therefore, the company’s board of directors formed a special committee to conduct an investigation of the company’s stock option grant activity that was to retain independent outside legal counsel to conduct a thorough review of the company’s stock option programs.

Also in June, the company disclosed that the Securities and Exchange Commission had contacted the company and requested certain information regarding option grants to its executive officers, directors, and employees for the period since January 1, 1997.

Today, Sanmina-SCI said in a statement that although the investigation is still on-going, “the special committee’s preliminary review has discovered potential discrepancies between the actual dates of measurement used for financial accounting purposes and the recorded grant dates of certain stock option awards.”

Finally, the company said it is focused on resolving these matters quickly so as to allow it to file its financial statements, including any restatements of such if necessary, within the next 30 days.

Source: Electronic Business