Diligent faces restating accounts over options bungle – trading halt sought

Diligent Board Member Services might have to restate several years' accounts after an investigation into incentives granted to its executives.

Following an announcement last month that it was cancelling stock options issued to chief executive Alex Sodi after breaching caps, the company asked for a trading halt today ahead of a report into the options bungle.

In its statement, Diligent said a report from a "major accounting firm", to be received today, "may" result in the company restating its accounts for the 2012 year and some prior years.

"This relates to the impact of cancelling certain options issued to certain executives under Diligent's 2007 and 2010 stock option and incentive plans.

"The Diligent board will urgently review that report upon its receipt and take appropriate advice."

The corporate governance software company set up a special committee to look at its incentive schemes after a New York law firm raised a flag over compensation and started encouraging shareholders to think about class action.

Last month Diligent said the committee had found that a 2009 award to Sodi exceeded the cap in the 2007 plan by 1.6 million shares and a 2011 award exceeded the cap in the 2010 plan by 2.5 million shares. A 2011 award to another executive exceeded the cap in the 2010 plan by 250,000 shares.

The company said last month it is working with regulators, including the Financial Markets Authority, to rectify a number of instances where Diligent was not, or may not have been, in compliance with regulatory obligations, including US and New Zealand securities regulations.

Diligent shares (NZX: DIL) have gained 110% over the last 12 months, making it one of the NZX 50's best-performed companies, but has slipped 2.7% this year over its options troubles.

- with BusinessDesk

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