The recent stock options backdating issues at Juniper Networks Inc. could end up having serious repercussions for the company, sources say, possibly even leading to the ouster of some of its top executives. (See Feds Call on Juniper.)

One analyst source confirms that people in the investment community are talking about a potential change in Juniper leadership. But, the source says, both institutional and private investors are split on whether such a move would benefit the company and its stock. (See Options Scare Hits SafeNet, Juniper.)

Juniper said that on May 22 it received a Request for Information from the United States Attorney for the Eastern District of New York, regarding its stock options granting practices. Juniper says it’s cooperating, but unlike some others who’ve been ensnared in options back-dating inquiries, it's made no announcement of a formal internal inquiry.

In the meantime, shareholder irritation on the matter appears to be growing. Shortly after the Justice Department's request, Juniper was served with two separate lawsuits concerning its stock back-dating practices.

One of the complaints, which was filed in the District Court of Northern California, reads as follows:

In gross breach of their fiduciary duties, the directors/officers of the company colluded with one another to improperly backdate grants of company stock options to defendant Scott Kriens, the company's Chief Executive Officer and several other Juniper executives, in violation of the company's shareholder-approved stock options plans...

As a result of the Defendants' egregious misconduct, Juniper has sustained million of dollars in damages, and Defendant Kriens and the other recipients of the backdated stock options have garnered millions of dollars in unlawful profits.

(See Juniper's Suits)

Morgan Keegan & Company Inc. analyst Simon Leopold says the back-dating inquiry, in combination with the lawsuits, is souring some investors on Kriens and his team. “It highlights the anger over what is perceived as corporate greed at shareholders' expense,” Leopold writes in a June 15 investor brief.

“This news likely further pressures the stock, with the options back-dating issue and general market malaise outweighing the fact that business fundamentals are unchanged,” Leopold writes.

U.S. Bancorp Piper Jaffray analyst Troy Jensen points out that, based on the fates of senior executives at Comverse Inc. and Vitesse Semiconductor Corp. stemming from the stock options scandal, one shouldn’t rule out executive ousters at Juniper. (See Vitesse Gets Subpoenaed and Comverse CEO, CFO Resign.) The removal of CEO Scott Kriens would be a big, big deal, of course. “If Juniper lost Scott, that’s the culture of the company,” Jensen says.

Kriens has been CEO at Juniper since 1996.

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