SEC to Probe THQ's Option Grants
THQ (THQI) is the latest company to find itself in the crosshairs of the Securities and Exchange Commission over its past options grants.
The video-game software publisher announced Monday that the SEC has launched an informal inquiry into its options grants dating from January 1996 to the present. The SEC has requested documents and information relating to those grants and the company's options-granting practices, the company said.
"THQ intends to cooperate fully with all matters related to this request," the company said in a statement.
The company, which gets the bulk of its sales from kid-friendly games, such as those based on Pixar's movies, also acknowledged that it had launched its own internal probe into its historical options grants. THQ had launched the internal investigation voluntarily, and it pre-dated the SEC probe, the company said.THQ did not say whether it had found any problems with its past grants or indeed what problems it -- or the SEC -- were looking for. However, the company launched the internal investigation and hired an outside counsel to lead it in reaction to the broader concern on the Street about past options grants at public companies. Those concerns largely focus on the issue of backdating. 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. But with backdated options, 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. THQ is the third video-game software publisher whose options grants are being scrutinized by the SEC. Activision (ATVI) and Take-Two (TTWO) have previously announced that they are the subject of SEC probes.
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