THQ Finds 'No Evidence Of Misconduct' In Options Investigation

Major game publisher and developer THQ has announced the completion of an independent investigation into company's historical stock option grant practices, finding "no evidence of fraud or misconduct" by execs at the company. The company is co-operating with an SEC investigation into the same issue, initiated in August 2006, as part of a big business-wide crackdown that has also caught up companies including Activision and Take-Two. An Associated Press report at the time noted that THQ had become one of more than 60 different companies currently being investigated by the SEC over stock option irregularities, in particular the practice of “backdating” stock option grants to time them at share price lows, thus increasing their sale price value. However, the internal THQ investigation was conducted by a Special Committee appointed by the company's Board of Directors with the assistance of independent legal counsel, Latham & Watkins LLP, and outside forensic accounting experts, and claims no misconduct. Nonetheless, in connection with the incorrect measurement dates, the company will record additional non-cash stock-based compensation expense and related tax effects in the aggregate amount of approximately $11 million, after tax, for the period from January 1, 1996 through March 31, 2006. In addition: "The Special Committee recommended certain corrective measures to improve the company's procedures for granting and administering stock options, which the Board of Directors adopted and the company is implementing."