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Jabil CEO options included in inquiry

The SEC is looking into stock option "perfect paydays"based on transaction timing. Jabil is also facing a related shareholder lawsuit.

By HELEN HUNTLEY
Published May 4, 2006

The St. Petersburg company said Wednesday it was contacted late Tuesday by SEC representatives who said they will be conducting an informal inquiry in response to media reports. The company said it will cooperate but its own investigation found no evidence of wrongdoing.

Jabil CEO Tim Main was one of a half-dozen public company executives who pulled off "perfect paydays" through the timing of option grants, according to a Wall Street Journal article in March.

The CEOs all got grants of stock options just before the stock price started climbing and often right after it took a big drop. The SEC is investigating whether the patterns occurred because the option grants were backdated. The lower the price when the option is granted, the bigger the potential payoff for the CEO, who makes a profit if the stock sells for a higher price. Typically, the options cannot be exercised for at least a year after they are granted.

Main received six grants of options between 1995 and 2002. The Journal said the odds were about 1 in 1-million that his good timing on the transactions could have been completely by chance.

One example: Main received options for 248,800 shares at $15 a share, the closing price Sept. 20, 2001. The stock doubled over the next three months. Wednesday, it closed at $40.78 a share.

Jabil said reviews by management and by a committee of the board of directors found options had not been backdated for officers or directors and that appropriate documentation had been filed with the SEC.

The company also is defending itself against a related shareholder lawsuit claiming it breached its fiduciary duty to shareholders.

Helen Huntley can be reached at hhuntley@sptimes.com or 727 893-8230.

[Last modified May 4, 2006, 07:13:39]