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Marvell CEO Stays On

Shares rally as the board declares a backdating probe complete.


(MRVL) - Get Marvell Technology Group Ltd. Report

rose Monday after the broadband chip company said its CEO will keep his job despite having participated in an options backdating scheme.

The Santa Clara, Calif., company said Sehat Sutardja will stay on as CEO but drop his chairman's title in favor of a new nonexecutive chairman, for whom the company is searching.

Marvell said a board probe of the company's option-granting practices concluded that "the actual measurement dates for financial accounting purposes of numerous stock option grants issued in the past differ from the recorded grant dates of such awards" but that Sutardja "participated in only a few instances in grants with incorrect measurement dates."

Three other execs stepped down or were fired, Marvell said. Marvell is working on a restatement of past financials that will add as much as $350 million to stock compensation costs.

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"The Special Committee reported that several current and former members of management, including the previously terminated general counsel of its U.S. operating subsidiary and the recently resigned chief financial officer and chief operating officer, bear varying degrees of responsibility for these deficiencies," the company said.

Matthew Gloss, the former general counsel of the U.S. unit, "previously had been terminated." Marvell said it accepted the resignation of George Hervey, the company's chief financial officer.

Weili Dai, co-founder and operating chief, will continue "in a significantly reduced role as the director of strategic marketing and business development, a non-management position," Marvell said.

Marvell said Sutardja has agreed to reduce the number of shares received in a 2003 grant by 2 million postsplit shares. That, Marvell said, "is the amount of underlying shares mistakenly awarded by a committee of independent directors in excess of that authorized under the applicable stock option plan."

Dai also has agreed to cancel options to buy 1.5 million postsplit unvested shares, "and to limit the exercisability of already vested options."

Shares rose 38 cents to $17.98.