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SEC To Scrutinize THQ's Options Grants |
Listed in: Wii, PS3, Xbox 360 Tags: Activision, Nickelodeon, SEC, Sega, THQ
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After Take Two and Activision, THQ is the third video-game software publisher whose options grants are being scrutinized by the SEC (Securities and Exchange Commission). As for you who don't know, THQ Inc. is the publisher of video games based on assets from Nickelodeon, Pixar, and WWE. It owns several intellectual property rights like Destroy All Humans! and Juiced and also published several Sega titles for portable systems.The company announced that the SEC has launched an informal inquiry into its options grants dating from January 1996 to the present. The SEC has now requested documents and information relating to the company's grants and options-granting practices.
Just what are option grants, you ask? According to Troy Wolverton, Senior Writer for TheStreet, "Employee stock options typically grant insiders the right to buy their company's stock at a price equal to the market price of the stock on the day the options are granted." The problem kicks in when with backdated options. Wolverton adds, "companies are alleged to have assigned to the options a strike price equal to the market price on a date days or weeks before the grant date, which was known at the time of the grant to be a short-term low in the company's stock."
The company said that they intend to fully cooperate with SEC as they had launched its own internal probe into its historical options grants. SEC has launched probes on over 80 companies in the broader backdating scandal. In this light we would like to know your comments on how this probing activity by SEC could actually affect video game software companies like THQ and its customers.
Via TheStreet
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