Atlanta, GA, June 23, 2006--Home Depot, said Friday that the Securities and Exchange Commission had begun an informal inquiry into its stock-option practices and procedures.
In a regulatory filing, Home Depot said it would cooperate with the inquiry and it expected no weakening of its consolidated financial position or results of operations, though it noted that it could not predict the outcome of the matter.
Home Depot said the inquiry related to its disclosure last week that in three cases before December 2000, stock options were awarded to some executives at below-market prices and that an internal review had showed unrecorded stock option expenses of up to $10 million.
In a June 16 statement, Home Depot said it had determined that there was no material effect on previously filed financial statements and said it would not restate any results.
The retailer also said that since December 2000, the exercise prices of stock options had been based on the market price of shares on a specified grant date. It said it had found no cases where options had been retroactively priced.
About 50 public companies are facing federal investigations into possible manipulation of options grants to increase their value to the employees receiving them.
Reports of the informal inquiry come less than a month after Home Depot angered shareholders who showed up at its annual meeting in Delaware to find no outside directors present.
As criticism grew in the days after the meeting, Home Depot announced that all directors would attend the 2007 shareholder gathering. The company also said it would return to its traditional format for those meetings, including a business overview and time for shareholder questions.
Also yesterday, Xilinx, which makes programmable computer chips, said federal regulators were conducting an informal inquiry into its practices, procedures and disclosures related to stock option grants. The company said it was cooperating with the S.E.C. inquiry.
