Foundry CFO resigns amid options probe

Foundry CFO resigns amid options probe

	Published : Tue, 23 Jan 2007 02:33 By : Agencies Print this Story

SANTA CLARA, Calif. (AFX) - Foundry Networks, Inc. said on Monday its chief financial officer and president resigned after a board ordered review found several issues with company executive's stock options practices.

The company's internal review of its stock options practice uncovered CFO Timothy D. Heffner had exercised two stock options in which he gained a net after-tax difference of $162,000 due to improper dating. Heffner has agreed to repay the difference.

Heffner will be replaced by Daniel W. Fairfax, current principle accounting officer. The company said the former CFO will serve as the vice president of corporate development.

The company's special committee, along with independent advisers, reviewed grants made on 107 dates between the first day the company's stock began trading on the Nasdaq Stock Market in September 1999 through May 31, 2006.

'In some instances, documents, data, and interviews suggest that the option grant was prepared or finalized days or, in some cases, weeks after the option grant date recorded in the company's book. The affected grants include grants to existing employees, newly-hired employees, officers and directors,' the company said in a released statement.

Foundry said in a substantial number of cases it found the company's chairman, president and chief executive Bobby Johnson Jr. had selected grant dates for and approved option awards after the grant dates had been recorded by the company. Foundry notes Johnson did not receive any options in connection with these grants.

Foundry will restate its financial records for all quarterly and yearly periods from Dec. 31, 1999 through 2005.

The company expects to submit its annual financial report for the second and third quarters of 2006, which have been delayed due to the investigation, as soon as possible.

Separately, Alfred J. Amoroso has been appointed as the new chairman of the board, after the Jan. 19 resignation of Bobby Johnson.

Foundry Networks is one of at least 106 companies that has been questioned by the U.S. Securities and Exchange Commission and has received a subpoena from the Justice Department.

Shares of Foundry dropped 29 cents, or 2.1 percent, to $13.56 in aftermarket trading, after dropping 30 cents, or 2.1 percent, to finish at $13.85 on the Nasdaq.