Option scandal claims McAfee scalps

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The Independent Online

The boardroom fall-out from America's stock options scandal widened yesterday, as another three senior technology company executives lost their jobs.

McAfee, the anti-virus software company, fired its president and said its chief executive would retire after finding evidence that share options were backdated to improperly inflate executive remuneration.

And CNET Networks, a pioneering online media company, ousted its co-founder and chief executive, Shelby Bonnie, as it tried to draw a line under the scandal.

They are the latest victims of a cull of technology executives that in the past week has included the founder of job search website Monster.com, Andrew McKelvey, and the former chief financial officer of Apple, Fred Anderson.

More than 100 companies - mainly technology companies - are under investigation by the Securities and Exchange Commission, Wall Street's regulator, and federal prosecutors have issued dozens of subpoenas in the expectation that criminal charges will be possible in many cases.

Dozens of companies have already admitted they backdated share options, pretending they were granted on days when the share price was low. Option holders make a profit when the share prices rises from the price at which the option was granted, so holding the grant price artificially low is a way of turbo-charging executive compensation.

The deception also throws company accounts into chaos, and several companies - including Apple - have had to delay publication of results while they restate years of previous figures.

George Samenuk, chief executive of McAfee, said he would retire with immediate effect. The company fired its general counsel, Kent Roberts, in May when the severity of the stock options problems came to light. The president, Kevin Weiss, was also forced out yesterday.

CNET revealed yesterday that its general counsel and its head of human resources had quit, too.

Apple's chief executive, Steve Jobs, apologised to shareholders last week after a three-man board committee found 15 incidents of stock option backdating, but questions continue to swirl around the iconic technology company. A newspaper report yesterday questioned potential conflicts of interest among the members of the investigation. Jerome York, the veteran board member who quit General Motors last week, excused himself from discussion of grants made when he was on Apple's remuneration committee. The other members of the committee are believed to have been the former US vice-president, Al Gore and Eric Schmidt, chief executive of Google, whose former company, Novell, is examining options grants made while he was chief executive.

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