McAfee CEO, President Leave After Options Probe

By Michael Kahn, Reuters  |  Posted 2006-10-11 Print this article Print

Updated: McAfee fires its president and says its chief executive will retire after an internal probe into the software maker's stock option practices, but shares rise more than 3 percent on hopes that the invest

There is an updated version of this story available. For the most recent version, click here. NEW YORK/SAN FRANCISCO (Reuters)—McAfee Inc. Wednesday fired its president and said its chief executive would retire after an internal probe into the software makers stock option practices, but shares rose more than 3 percent on hopes that the investigation was nearing an end. The departures of Chairman and CEO George Samenuk and President Kevin Weiss due to accounting discrepancies in stock options grants come after the No. 2 security software company fired its general counsel in May over the issue.
Samenuk and Weiss are also the latest casualties in a deepening stock-options probe that has hit more than 120 companies and led to the departure of senior executives at Monster Worldwide Inc. and CNET Networks Inc., among other companies.
McAfee also said it expected to take a charge of up to $150 million to restate earnings to reflect more stock-based compensation expense. Analysts said the news lifted the stock because investors had been wary of buying shares of a company in the early stages of a complicated stock option investigation. "It now appears the company is getting closer to the end of this investigation, coupled with the fact that McAfee has now separated the company from the individuals," FBR analyst Daniel Ives said in a research note. He said Wednesdays management changes also open the door for Chief Operating Officer and Chief Financial Officer Eric Brown to take on a bigger strategic role—a positive development given the executives track record at McAfee and credibility on Wall Street. McAfee said Samenuk was retiring, while the board had terminated Weiss. Dale Fuller, who joined the board in January, will be interim CEO and president. Fuller spent more than six years as CEO and President of Borland Software Corp.. He has also worked for Apple Computer Inc.s Powerbook division and NECs portable computer division, McAfee said. In a statement, Samenuk said: "After almost six years at McAfee , I have retired as Chairman and CEO in the best interests of the company, its shareholders and employees. I regret that some of the stock option problems identified by the Special Committee occurred on my watch." McAfee said it believed it would need to restate past financial statements by $100 million to $150 million after an internal review found it should record more charges for stock-based compensation expenses over a 10-year period. McAfee said it intended to file its restated financial results and annual report as quickly as possible, and it would start looking for a permanent CEO. Charles Robel, a former PricewaterhouseCoopers partner who joined McAfees board in June, was named nonexecutive chairman. McAfee had disclosed in August that its internal review found discrepancies in accounting measurement dates for some past stock option grants. Shortly after McAfees announcement on Wednesday, online news and products review company CNET said Shelby Bonnie had resigned as chairman and CEO after a special committee found that he shared the blame for backdating stock options. U.S. prosecutors have filed criminal fraud charges against former executives of Brocade Communications Systems Inc. and Comverse Technology Inc. McAfee shares were up 88 cents, or 3.4 percent, at $26.67 in afternoon New York Stock Exchange trade.

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