US cable firm gave share options to dead executive

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The Independent Online

An American cable television company granted share options to a dead executive, and pretended they were given to him before he died.

The admission by Cablevision is one of the strangest revelations so far in the options backdating scandal that has outraged Wall Street and tarnished more than 100 firms.

The company said it had discovered an inappropriate share option grant to a director understood to be Marc Lustgarten, a former vice-chairman, who died from cancer in 1999. Mr Lustgarten's widow would have been able to bank the profit when the options were exercised by his estate. After Mr Lustgarten's 24 years with the company, he had become a close confidant of Cablevision's founders, the Dolan family.

The company declined to comment beyond a formal statement late on Thursday. It remains unclear whether the posthumous grant was meant as an act of generosity to his widow or whether it had been done to disguise the backdating of other executive options.

Cablevision is the No 5 cable company in the US. Its media interests also include the New York Knicks basketball team and the city's Madison Square Garden sports venue. It is one of several dozen companies being investigated by the Securities and Exchange Commission (SEC) over backdating options. It is also facing a federal investigation, and now says that the cover-up meant its financial results overstated profits by a total of $89m (£47m) over ten years. Two Cablevision board members - one each from the remuneration and audit committees - resigned late on Thursday because of the scandal.

The company admitted that it routinely "turbo-charged" executive remuneration by pretending share options were granted on days when the share price was low to maximise the potential profit when they were exercised.

It also said that an outside consultant advising on remuneration had been granted backdated options as if he were an employee.

The most high profile company under investigation by the SEC is Apple, whose chairman, Steve Jobs, was granted an option over10m shares, dated on the stock's lowest point in January 2000.