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January 23, 2007
Bobby Johnson will remain at the helm of Foundry Networks Inc. (Nasdaq: FDRY) as CEO, although he's giving up his seat as chairman in the wake of the company's stock-options investigation.
Foundry announced last night the completion of its review, which found that Johnson did authorize the back-dating of stock options -- a practice that's gotten many tech companies into hot water in the past year.
Johnson did not receive any of those back-dated options himself, however, and he hadn't been notified that the practice could affect Foundry's bottom line, investigators concluded. (See Foundry Shuffles Execs and Foundry, VeriSign in Stock Option Probes.)
Replacing Johnson as chairman will be board member Alfred J. Amoroso, CEO of Macrovision Solutions Corp. and a Foundry board member since 2000.
Foundry will end up restating results for fiscal years 1999 through 2005 due to the compensation charges tied to the options in question. Factoring in those charges, and subtracting out some associated tax benefits, Foundry expects to take a total net charge of $120 million to $135 million.
Foundry also announced a job change for VP and CFO Timothy D. Heffner. He's been named the vice president of corporate development; Daniel Fairfax will be taking his place as CFO.
Heffner apparently was popular with Wall Street. Analyst Mark Sue of RBC Capital Markets , in a note issued this morning, describes him as "well-liked." Sue goes on to say that Foundry is doing well, despite the whole options thing: "We continue to believe that Foundry is distancing itself from competitors" such as Extreme Networks Inc. (Nasdaq: EXTR) and Enterasys Networks Inc. .
Options scandals haven't affected the stock prices of most companies. Foundry shares were up 19 cents (1.4%) at $14.04 midday.
— Craig Matsumoto, West Coast Editor, Light Reading
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