Feb. 21 (BusinessDesk) – Diligent Board Member Services, whose shares have more than doubled in the past 12 months, says it is studying a report into stock options granted to chief executive Alessandro Sodi and other employees though it isn’t yet clear if the company needs to restate earnings.
The company, whose Diligent Boardbooks software helps directors to manage corporate governance information flows, had its stock halted this week pending receipt of the report from an accounting firm. Diligent set up a special committee in December after being notified that some options and shares granted to executives may not have complied with the relevant incentive plans.
“The report does not make clear recommendations as to any adjustments to be made,” the company said.
Rather, it “raises complex accounting issues for consideration as to how previous years and the current year’s accounts may be affected by Diligent having issued options in excess of caps in the plans to employees and cancelling those options,” it said.
The company is working through the detail with its advisers and auditors and sought an extension on the trading halt of its shares in the meantime. To avoid a repeat of such issues, it is bolstering its compliance team, it said.
Last month Diligent said the committee had found that a 2009 award to Sodi exceeded the cap in the 2007 Plan by 1.6 million shares and a 2011 award exceeded the cap in the 2010 Plan by 2.5 million shares. A 2011 award to another executive exceeded the cap in the 2010 Plan by 250,000 shares.
The committee also identified a number of instances where Diligent may not have been in compliance with New Zealand regulations such as granting stock options to employees in the absence of a prospective.
Today the company said it is working to develop alternative compensation packages. The award of options had been deemed as reasonable compensation at the time and the board “does not wish to see highly performing employees such as Mr Sodi penalised as a result of technical non-compliance by Diligent in implementing the plans,” it said.
Shares of Diligent last traded at $5.35 on the NZX, valuing the company at $448 million. The stock traded at just 7 cents in March 2009.