Juniper hit with $900m backdating charge

The cost of the options backdating scandal came into sharper focus on Wednesday after Juniper Networks, the world’s second-biggest maker of data networking equipment, said it expected to take a $900m charge to account for improperly dated options grants.

The company’s expected restatement would be one of the biggest at a Silicon Valley company since news of the scandal broke in March. Broadcom, a semiconductor equipment maker, has said it expects to record costs of $1.5bn as a result of the scandal. The news came a day after UnitedHealth, a healthcare provider, said it expected to take a non-cash charge of up to $600m related to backdating – an apparently widespread and potentially fraudulent practice in which the value of an options grant is artificially inflated by changing the grant date to coincide with a low point in the value of a company’s shares.

Juniper said on Wednesday that an internal probe into options grants found that the dates were chosen “with the benefit of hindsight…so as to give favourable prices” to grantees. It said its investigation had uncovered “serious concerns regarding certain former management” at the company.

More than 160 companies are under investigation by US authorities or have launched their own internal probes into suspected options backdating. Several dozen companies have announced that they may be forced to restate their financial results. Dozens of top executives have been sacked, while former executives at two companies have been charged with securities fraud for their roles in alleged options abuse.

Scott Kriens, Juniper’s chief executive, expressed regret over the scandal. “In prior years, we should have had better stock option granting processes, controls and oversight in place, and we did not,” he said. Juniper said on Wednesday that its board remained confident in Mr Kriens and his management team.

Juniper’s shares fell 0.8 per cent to $19.05 in after-hours trading following the announcement. The shares had risen from $15.49 in May, when it revealed it was under investigation for suspected backdating.