Santa Ana-based First American Corp. is reviewing its stock option grant practices and might be forced to take a write-down, the company said in a regulatory filing.
The company, the country’s second-largest title insurance provider, said in a filing with the Securities and Exchange Commission that it has started an internal review of its stock option awards.
The review covers the documentation and procedures for three company stock option plans, made in 1996, 1997 and 2006. The options reportedly cover close to 17 million shares.
First American “believes it may need to record additional non-cash charges for stock based compensation expense for certain prior periods,” the company said in its filing.
The amount of any potential write-down, and any resulting tax impact, is too early to determine, the company said.
The SEC and the New York Stock Exchange have been notified about the review. The company plans to hire an outside lawyer to handle the investigation.
The SEC has been examining the stock options practices of a number of U.S. companies to see whether grant dates were manipulated to increase profits for recipients of the options.
Shares of First American were trading up slightly on Thursday.
