The Clients
A number of publicly traded companies with equity-based incentive compensation programs for senior executives

The Challenge
Beginning in 2006, public companies in the U.S. whose executive compensation plans emphasized the granting of stock options increasingly had to deal with regulatory and prosecutorial investigations from the SEC.  The inquiries raised questions over when and why stock options were granted, and whether such grants violated securities laws and other statutes such as Sarbanes-Oxley.  These investigations could potentially lead to civil or criminal charges against companies and individual executives, restatement of financial results, and subsequent shareholder and derivative lawsuits over the negative financial impact of these actions.

The Haynes and Boone Solution
Haynes and Boone’s formed an inter-disciplinary securities task force to conduct investigations, formulate disclosures and respond to claims that related to backdating concerns.  Our lawyers represented parties on every side of such disputes – including companies, boards of directors and their independent committees, as well as individual executives.

We drew on the firm’s full resources, involving colleagues from tax, employee benefits and white-collar defense to advise and assist clients with investigations, respond to the regulators and defend against derivative and class action litigation.  In all our advice, we made sure that directors fully complied with their fiduciary duties and disclosure obligations.

The Outcome
Our understanding of the securities laws, coupled with insight into the tactics and objectives of prosecutors and SEC investigators, provided reassurance to clients facing the threat of charges over compensation strategies that were implemented in good-faith.  In each instance, we either successfully resolved the government’s inquiry or settled any attendant shareholder lawsuit.  We’ve been equally effective at helping clients implement proper compliance strategies to avoid any potential options dating problems in the future – and our experience in these matters promises to be a valuable resource to clients who may face controversies over subprime-related collateralized debt obligations.