Santa Ana-based title insurer First American Corp. has come up with a bill for mispriced and improperly accounted stock option grants during the past 10 years: $35.7 million.
First American, one of several Orange County companies dealing with the timing of option grants, described the cumulative impact of the issue on the company’s shareholders’ equity as “negligible.”
The company counts yearly sales of $8 billion. The number also is small compared with the county’s most high-profile options case involving Broadcom Corp. The Irvine chipmaker expects $1.5 billion in costs to correct misdated options of the past few years.
A subcommittee investigating First American’s backdated stock options said it did not find that the errors were the result of fraud, self-interest on the part of management or directors or an intent to misstate the company’s financial statements.
The vast majority of the grants were made to non-executive employees of the company, the subcommittee reported.
First American said it would restate earnings from 2001 to 2005. The restatement is expected to result in lower profits for the period.
The company also expects expenses of $1.9 million in the current quarter related to the probe.
Wall Street seemed to find closure in the news. First American’s stock was up nearly 3% during trading Friday.
