Irvine-based chipmaker Broadcom Corp. last month agreed to pay $160 million to settle a class action shareholder lawsuit related to stock options backdating.
Under the settlement, claims against Broadcom and some former executive officers and directors will be dropped.
The proposed settlement still must be approved by a judge.
The company and the individual defendants—a current executive, former executives as well as directors—“vigorously contested” the allegations.
The settlement allowed them to deny any wrongdoing.
Broadcom said it expects to record the payment as a onetime charge in its fourth-quarter results, which are set to be reported Feb. 3.
The suit was brought on behalf of investors who bought or acquired Broadcom’s shares from July 21, 2005, to July 13, 2006.
Former Broadcom finance chief Bill Ruehle and cofounder and Chief Technical Officer Henry Samueli were named as defendants, along with Broadcom itself.
Former general counsel David Dull, Alan “Lanny” Ross, a former Broadcom interim chief executive, current director George Farinsky and former director Werner Wolfen also were named.
In early 2007, Broadcom restated several years of financial results to reflect $2.2 billion in charges for misdated stock options.
The restatement bill was the largest of any company involved in a stock options issue.
Broadcom’s regulatory dealings over options are settled. A misplaced line in our Jan. 11 “Inside Broadcom” story about a pending appeal should have referred to the criminal cases of Samueli and cofounder and former chief executive Henry “Nick” Nicholas.
Federal prosecutors said earlier this month they plan to appeal the December order of U.S. District Judge Cormac Carney in Santa Ana, who threw out federal criminal fraud charges against Samueli, Ruehle and Nicholas, who left in 2003.
Ruehle’s dismissal likely isn’t being appealed given the Constitution’s protection against being tried twice for the same charge. His trial on options charges was nearly done when the judge dismissed his charges last month.
Also in December, U.S. District Court Judge Manuel Real granted final approval of a $118 million partial settlement in a separate civil suit filed by Broadcom shareholders.
That’s after Broadcom’s insurers agreed earlier this year to pay $118 million to resolve the backdating claims.
The settlement of that suit is deemed “partial” because Ruehle, Nicholas and Samueli remain as defendants, a Broadcom spokesman said.
Samueli, Nicholas
Broadcom’s two most famous names are busy with day to day comings and goings.
Last month, Broadcom directors elected Samueli as senior vice president and chief technical officer, marking his return to a formal executive role.
Samueli’s “responsible for driving the vision of Broadcom’s research and development activities as well as helping coordinate corporate-wide engineering development strategies.”
In early 2008, Samueli stepped down as chairman and chief technical officer amid the options issue. He continued to serve as a full-time Broadcom technology adviser in a non-executive post.
He made a handful of public appearances on behalf of Broadcom, with no role in financial or corporate affairs.
Last week, Samueli met with customers at the International Consumer Electronics Show in Las Vegas, where the company showed off its latest chip offerings.
Nicholas, who earlier this month saw prosecutors drop drug charges against him that stemmed from the options probe, is continuing his philanthropic efforts.
On Jan. 8, Nicholas’s foundation sponsored a cooking contest to support Pasadena’s Small Business Kitchen Incubator program, which allows entrepreneurs to test out their ideas in a 1,500-square-foot, fully equipped and licensed kitchen for a small fee.
The cook-off is part of a $1.2 million grant from the Henry T. Nicholas III Foundation, which focuses on education.
Nicholas had been charged with four counts of distributing drugs to friends and business associates.
He has made friendly media appearances in the past few years at charitable events, including at Santa Ana academic centers that bear his name, a Pacific Symphony gala and for Habitat for Humanity.
New Tenants
Santa Ana’s Digital Media Center business incubator, a collection of inexpensive office spaces for startups that’s run by the Rancho Santiago Community College District, recently added four tenants.
With the new companies, there are now nine digital media companies at the center.
The newcomers:
• Just Enjoy LLC, which makes a software application that allows consumers to find a restaurant, make reservations, get driving directions, read and order from the menu and even pay from their cell phones.
• Nuvolo LLC, which helps other companies develop advertising content for display on flat TV screens known as “digital signs.”
• Private Capital Network, a group of angel investors.
• ProFormance Capital Inc., a boutique investment bank.
Correction
I want to clarify some statistics I cited in a recent profile of Vizio Inc. Chief Executive William Wang as part of our annual roundup of notable businesspeople in 2009.
South Korea’s Samsung Group took the top spot from Vizio for total sales in North America of flat-panel TVs in the third quarter, according to data from iSuppli Corp. Vizio remained No. 1 for sales of liquid-crystal display TVs in the U.S. during the period. Vizio stopped selling plasma TVs last year.
