Mar. 16, 2007
LOS ANGELES (AP) - The Walt Disney Co. said Friday that while stock-option awards to some employees of Pixar Animation Studios were backdated, no one associated with Disney today -- including board member Steve Jobs -- deliberately did anything wrong.
Federal prosecutors and the Securities and Exchange Commission are looking into the backdated grants made to key Pixar employees several times since 1997, but before Disney bought Pixar in 2006.
'The company has offered complete cooperation with the SEC and the Justice Department in connection with this inquiry,' Disney spokeswoman Zenia Mucha said Friday.
Jobs held more than 50 percent of Pixar's stock and after the acquisition became Disney's single largest shareholder and a board member.
Jobs also is embroiled in a probe of stock options at Apple Inc., where he is chief executive. An internal company probe at Apple cleared Jobs of wrongdoing in the backdating of thousands of options, including grants to Jobs. Federal authorities are continuing their probe into those grants.
Disney Chairman John E. Pepper said the company would follow up on the additional income tax liability facing Pixar employees who hold the options. The company, he said, 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 Disney's financial statement, Pepper said.
Disney officials say the tax costs will likely amount to less than a penny per share in fiscal years 2007 and 2008.
Pixar Animation Studios granted stock options to key executives four times since 1997 on dates that coincided with the company's lowest stock price, company filings show.
Jobs did not receive any of the options grants from Pixar. Instead, they were given to John Lasseter, Ed Catmull and other executives.
Lasseter and Catmull assumed important roles at Disney after the acquisition. Catmull runs Disney's feature animation unit while Lasseter is a creative consultant for both Disney's animated films and theme park attractions. The two executives also continue to run Pixar, which is based in Emeryville.
At least 203 companies have disclosed SEC, Department of Justice, or internal probes into their stock-options practices, according to an Associated Press review. The investigations focus on 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, a practice that can inflate the recipient's award.
Although the manipulation itself isn't necessarily illegal, securities laws require that companies properly disclose the practice in their accounting and settle any resulting charges.
