Options Talk Hits Juniper, F5

Concerns over stock-option timing broadened this week to include tech shops Juniper (JNPR) and F5 Networks (FFIV).

Analysts sorting through public filings found that option grants at Juniper and F5 were repeatedly priced over seven years at the stocks' monthly lows. To market watchers, these patterns suggest that the options could have been timed or backdated to maximize their value to company executives.

Wall Street, already jittery over inflation news, has shown little sympathy for companies that have come under scrutiny in a growing options-backdating scandal.

Shares of Juniper fell 4% Thursday and F5 has slid 12% in the past three days on worries that these stock-option grants will invite investigations and costly legal battles.

The notion that fat cat executives could be lapping up even more cream from the stock-option bowl through questionable moves emerged earlier this year.

On March 18, The Wall Street Journal reported that the Securities and Exchange Commission was examining about a dozen companies for possible options backdating. In the story, the paper pointed to executives including Bill McGuire, CEO of UnitedHealth (UNH), and Jeff Rich, CEO of Affiliated Computer Services (ACS), who appear to have benefited from a pattern of grant timings.

Shares of UnitedHealth and Affiliated Computer are both down 18% since the story broke. UnitedHealth received a subpoena Wednesday from the U.S. attorney for the Southern District of New York requesting stock-option documents dating back to 1999.

Juniper and F5 were pulled into the options-timing spotlight this week after analysts flagged patterns of questionable grant dates. Accounting muckrakers at Center for Financial Research and Analysis identified 17 companies that may have to explain some troublesome option datings.

And JPMorgan analyst Ehud Gelblum released a report Thursday reviewing executive-option grants for 14 companies dating back to 1998. Three of the companies -- Motorola (MOT), Juniper and F5 -- show a suspicious pattern of grants at their stock's low for a given month.