Novell Says It Has a Decade of Stock Compensation Errors

Published: April 24, 2007

by Timothy Prickett Morgan

Commercial Linux distributor Novell said in a filing to the Securities and Exchange Commission that it has come to some preliminary conclusions regarding its review of stock-based compensation. Novell voluntarily started doing a review at the end of August 2006, which many companies did after scandals involving the backdating of stock options seemed to be erupting in the press on a daily basis.

"The investigatory portion of the review, which is now substantially complete, has not identified any intentional wrongdoing by any former or current Novell employees, officers or directors," the company said in a filing with the SEC. "Management believes, however, based on the findings of the review thus far, together with the assistance of management's separately retained outside legal counsel and forensic accounting firm, that Novell utilized incorrect measurement dates for some of the stock-based compensation awards granted during the review period."

The period that Novell found errors in relating to the dating of stock options starts November 1, 1996 and runs through September 12, 2006. "Novell and its advisers continue to work diligently on the review and the company will disclose the results once the review is completed," the statement continued. "At this time, however, Novell is not in a position to predict when the review will be completed."

Since announcing the review of stock options, Novell has not posted its quarterly financial filings with the SEC, nor did it file its annual filing in November for its year ended on October 31, 2006. At some point, the NASDAQ and the SEC are probably going to get annoyed that this is taking so long. Novell has been announcing preliminary financials since last summer, and warning investors that this review was underway and could potentially affect its reported income for prior years.

RELATED STORIES

Novell Gets Pinched By Rising Costs, Falling Sales

Novell Boosts Profits in Fiscal Q4 Despite Revenue Declines

Novell, Nasdaq, and Wells Fargo Bicker Over Debt Default

Novell Sees Sales Slip in Q3, Undertakes Stock Option Review

                     Post this story to del.icio.us
               Post this story to Digg
    Post this story to Slashdot