October 21, 2006 in Business

Costco CEO, CFO won’t take bonuses

Associated Press The Spokesman-Review
 

NEW YORK — Costco Wholesale Corp. said in a regulatory filing that President and Chief Executive Jim Sinegal and Chief Financial Officer Richard Galanti won’t receive bonuses this year due to their responsibility for a stock options granting process that was found to have “imprecisions,” according to a filing with the Securities and Exchange Commission.

Issaquah, Wash.-based Costco said last week that an internal committee, along with independent counsel and forensics experts, found no evidence of fraud in an in-house review of the company’s stock option grant practices, but did find “imprecisions” related to certain grants.

None of the options in question were issued to Costco’s CEO, chairman or non-employee directors, except in April 1997, when the CEO and chairman received a grant that may have benefited each by up to $200,000, the company said.

Costco said it doesn’t expect to restate any of its previously filed financial results based on the findings of the review. The company has informed the Securities and Exchange Commission of the special committee’s investigation and conclusions and will cooperate fully in the event of any inquiry.

According to Thursday’s SEC filing, Sinegal and Galanti suggested that they not receive bonuses this year due to their responsibilities for the imprecisions and need for a board inquiry. Costco’s compensation committee agreed.

Sinegal’s bonus would have been $200,000, while Galanti’s was set at $82,000.

Costco shares fell 3 cents, or less than 1 percent, to $51.63 in midday trading Friday on the Nasdaq Stock Market.

There are currently 90 companies under SEC or Justice Department stock-options grant scrutiny.

At least 49 other companies have launched or completed internal reviews into their stock options practices that are not currently facing an SEC or DOJ probe.

At least 135 companies have disclosed SEC, DOJ or internal investigations into the possible inappropriate backdating of stock options.

At least 40 senior executives or directors, including 11 CEOs, 9 finance chiefs and 8 general counsels have been fired or have stepped down at 17 companies, including UnitedHealth Group Inc., McAfee Inc. and CNET Networks.


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