Internal inquiry supports Jabil execs
Shareholders have accused the company 's leaders of backdating stock options. The review has led to the delay of its annual meeting .
By HELEN HUNTLEY
Published December 9, 2006
Jabil Circuit's top executives did not issue themselves backdated stock options or try to get others to issue them, according to an internal company investigation released Friday.
A special committee headed by outside director Kathleen Walters found "no merit" to those allegations, which are contained in several shareholder lawsuits filed against the company.
However, Jabil said its ongoing review of options practices will continue to delay the company's financial reports and force the postponement of the annual meeting, which had been scheduled for next month. No new date has been set.
The worldwide electronics manufacturer, based in St. Petersburg, is one of many U.S. companies under federal investigation for its handling of options grants. An option sets a price at which the holder can buy the company's stock in the future. The lower the initial price, the higher the potential reward. What raised suspicions were grants issued just before prices went up. A Wall Street Journal report included options granted Jabil chief executive Tim Main as examples of extraordinarily good timing.
Main has maintained his innocence even as executives at some other companies have been forced to resign or faced criminal charges. However, Jabil acknowledged last month that it will restate its 2005 results and possibly those of earlier years because of "administrative and logistical errors" made in carrying out the options program as well as errors or changes in the company's understanding of accounting guidance.
The delayed financial reporting is on the verge of putting Jabil in violation of agreements with lenders from whom it has borrowed $220-million. The company said Friday that lenders have given it until Feb. 2 to comply without penalty.
"That's a piece of good news," said Amit Daryanani, an analyst who followed the company for RBC Capital in San Francisco. He said he had expected the company to have to pay $4-million to $5-million to obtain the waivers from its lenders. Daryanani said the special committee's findings also are a positive. However, he said, the late filing presents problems for anyone who tries to follow how Jabil is faring financially.
"It makes it harder to understand what's going on in the business," he said.
The company makes a variety of consumer, automotive, medical and electronics products. Jabil's stock closed Friday at $28.43, down 43 cents, on the New York Stock Exchange.
Helen Huntley can be reached at email@example.com or 727 893-8230.
[Last modified December 8, 2006, 23:33:35]
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