Zoran (Sunnyvale, Calif.) was identified in the May 16 report as one of 17 companies considered “at risk for having backdated option grants." The report, which uses statistical data and draws inferences based on the timing of stock option grants to officers, Zoran said, cites three specific sets of Zoran option grants, made in August 1998, August 1999 and September 2001.

Zoran said it referred the matter to the audit committee of its board of directors for review. Under the direction of the audit committee, the company’s management, assisted by outside counsel, conducted an internal compliance review and "concluded that each of the option grants identified by the CFRA report had been properly made at a regularly scheduled meeting of the board of directors or its compensation committee," Zoran said.

The investigation, the company said, concluded that none of the grants in question involved any backdating — the practice of retroactively dating stock option grants for fair market value on dates when a company's share trades at relatively low prices.

Zoran said it has also conducted a broader review of all other option grants made to the company’s officers since Zoran’s initial public offering in 1995 and has reported to the audit committee that, in the opinion of management, all such grants have also been properly made. Management’s conclusion with respect to these additional option grants is still under review by counsel and the audit committee, Zoran said.

The CFRA report, which was cited in a May 18 article by The Wall Street Journal, also identified fabless chip supplier Broadcom Corp. as among the 17 highest-risk companies. A Broadcom spokesperson told EE Times last week that the company had reviewed the CFRA report and, "Based on our initial reading we are confident in the integrity of our options granting process."

The controversy over historical stock options granting practices has engulfed a number of electronics companies over the past several weeks. On Monday, chip equipment giant KLA-Tencor's chief financial officer reportedly acknowledged that the timing of historical stock options grants made by the company is under investigation by U.S. federal prosecutors. Fab automation provider Brooks Automation said Monday that it received a grand jury subpoena from the U.S. Attorney for the Eastern District of New York requesting records pertaining to the granting of stock options. Last week, Vitesse Semiconductor Corp. said it is being investigated by the U.S. Securities and Exchange Commission and the U.S. Attorney's Office on this matter.

Brooks, Vitesse, Altera Corp. and Power Integrations Inc., among others, have all indicated that they are investigating historical stock options granting practices internally. All but Altera have thus far experienced management shakeups and said they would restate at least some past quarterly earnings as a result of these investigations. Altera, Brooks and Vitesse have all acknowledged that they have been notified of possible delisting from the Nasdaq marketplace for failing to file their most recent quarterly report in a timely manner — something that each has said it would delay until the completion of internal investigations of options granting.

Contract manufacturing services provider Jabil Circuit Inc. said in early May that it had been contacted by the SEC in regard to its historical stock options granting practices. Jabil said an internal investigation found nothing improper.