Securities Fraud Lawyer - Maxim Integrated Products, Inc. Stock Option Backdating Litigation
Shapiro Haber & Urmy LLP served as counsel in a derivative action on behalf of Maxim, filed against certain former and current officers and directors of the company. The complaint was originally filed on June 12, 2006 by Maxim shareholder Walter E. Ryan, Jr. in Delaware Chancery Court (Maxim is a Delaware corporation). The complaint was amended on February 16, 2007 with the addition of new defendants and additional allegations of backdating. The Defendants in this case included former CEO and Chairman of the Board of Directors, John F. Gifford, along with other high-ranking officers including former Chief Financial Officer Carl Jasper.
The complaint alleged that Defendants Gifford and Jasper, along with other high-ranking officers, knowingly participated in an option backdating scheme that provided a financial windfall for the option recipients at the expense of the company itself. The complaint further alleged that many of the grant dates were not, as was required by the company’s stock option plan and reported in its SEC filings, priced on the same date of the grant, but were in fact chosen at a later date to secure low exercise prices and greater profits. The company admitted that its incorrect pricing of options caused Maxim to overstate its earnings by about $515 million between fiscal years 1997 and 2005.
The Court approved the settlement on January 2, 2009 under which Maxim received $38 million in cash and re-priced and surrendered options, and the settlement also included unique and innovative corporate governance reforms. Over the course of the litigation, our firm obtained several leading Delaware decisions in the areas of corporate governance and executive compensation. These include a landmark discovery decision requiring that Maxim produce to Plaintiffs material related to its internal investigation of the challenged conduct, a second decision clarifying and re-affirming the first decision, and a decision approving the settlement of the case.