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Barnes & Noble Finds 'Numerous' Improperly Backdated Stock Options

Reuters
Thursday, 5 Apr 2007 | 10:42 AM ET

Barnes & Noble said on Wednesday a special committee found numerous instances of improperly dated stock option grants and the company would need to make an adjustment decreasing its retained earnings by $22.8 million.

Barnes & Noble said the misdated stock option grants stemmed from administrative delays and poor record keeping.

The committee also said Barnes & Noble would need to take a charge due to the revised measurement dates and that the gross amount of the price differences was $45.5 million.

The company's officers will voluntarily pay $1.98 million to help make up the price difference.

Barnes & Noble said the committee reviewed stock option grants issued to more than 3,300 employees between 1996 and 2006 and found no evidence of fraudulent conduct as its dating and pricing practices were "applied uniformly" and were not intended to benefit any individuals or select group.

The bookseller also said it will record an adjustment of $200,000 to raise noncash compensation expense in the fourth quarter.

Jeffries & Co. analyst Tim Allen said the news should have little impact on Barnes & Noble stock and said the resolution represents a step in the right direction for the beleaguered book seller.

"If anything, it's a positive," said Allen, who has a "hold" rating on Barnes & Noble stock.

"Their share repurchases have been put on hold pending the outcome of this investigation. This just means they're getting close to buying back stock."

Last month, Barnes & Noble expected legal expenses stemming from the investigation to range between $4 million and $6 million.

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