An informal investigation conducted by the US Securities and Exchange Commission has cleared Dean Foods of backdating stock options.
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Dean Foods said late last week that the SEC recommended no enforcement action after ending its probe into the awarding of stock options.
When a stock option is backdated, the price of the option is based on a date prior to its issue date – meaning that if the price subsequently increases, the recipient would be able to cash them in for a higher payout.
The dairy company also revealed in a SEC filing that two shareholder lawsuits accusing the company of backdating stock options were settled during the first quarter.
As part of the settlement, Dean Foods agreed to adopt and implement stock option grant procedures that reflect “developing best practices”.
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By GlobalData
