In an interview, Micrel general counsel Vince Tortolano declined to give any additional information about the deal, but suggested that some clues about its size might be discernable from the company’s 10-Q for the first quarter of 2007, which will be filed in April or May.“Deloitte & Touche has denied, and continues to deny, any responsibility for the claims in the lawsuit brought by Micrel,” a spokesperson for the accounting firm said in an e-mail Monday.“The lawsuit has been settled to avoid the substantial expense and inconvenience of continued litigation.” I had been hoping it would go to trial, because it would have finally shed some light on how Silicon Valley accountants were analyzing options backdating issues in the late 1990s.(Many of the court filings in the case were lodged under seal, and are consequently unavailable.) The case was also intriguing because it was one of only two I know of so far — the other being Microsoft — where a company is believed to have actually secured the blessing of some outside “gatekeeper” ( i.e., an accounting firm or law firm) for a “backdating” scheme.Such options would not need to be expensed at all under the accounting rules of that time.
By that time, however, according to Micrel’s complaint, the lead Deloitte partner on the Micrel account had changed.Here is the chronology of the intertwined events at the two companies.In 1992, Microsoft instituted an options pricing policy that seems to have aimed at solving a problem many tech companies were then facing — one that only grew more intense during the dot-com bubble years.He was also feeling pretty stung that Apple's board never approached him with a stock option reward without his prompting.
The SEC claimed Heinen fraudulently cooked up options grants by misrepresenting the true dates the grants were awarded to times when the price was at a historic low.
At the outset of the options backdating scandal, there was much speculation that such gatekeepers had to be at fault, given how widespread backdating was prior to passage of the Sarbanes-Oxley law in 2002, but that theory has not yet borne much fruit.