Jottings By An Employer's Lawyer

Wednesday, July 12, 2006

Before the Scandal Hits - Someone Knows -- And Might Just Make a Copy

At least that's the developing story line in a lawsuit brought by Stephen Landry, the former head of Human Resources for Sycamore, bringing Sycamore into discussions about the scandal du jour -- companies backdating stock options.

The Lakeland website has a detailed story from the Associated Press, Memo: Sycamore workers discussed manipulating stock option grants, and Landry's claim he was terminated for opposing the backdating practices. For those interested in the backdating issue, the money quotes are about an internal memo attached to one of Landry's pleadings:
the memo says Ed Zaval, a vice president of customer service, "was promised his stock option grant would be issued at the low of the quarter price." It said his actual start date was Jan. 2, 2001, but the low for the quarter was Dec. 21, 2000, at $29.125. Under the category, "action," the memo says to "change Ed's date of hire to reflect 12/21/00 and his stock option should be granted 12/21/00."Under "risk assessment," the memo reads: "Low risk. Senior level employee and the risk of exposure to this agreement is low. No audit risk."
But for me, and for all employers, I think the real money quote is how Landry had a memo written after his termination. According to the story:
Landry's attorney, Kevin Powers, said a colleague of Landry's found the 2001 memo on a fax machine, made a copy and gave it to Landry.
That has a ring of truth -- in two different lawsuits I have handled documents obtained in just that way appeared as attachments to court pleadings. Never underestimate the power of a copying machine.

A hat tip to WSJ's LawBlog for the alert to this story.

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