Options Scandal Singes Foundry

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

Iipoed 12/5/2012 | 3:16:03 PM
re: Options Scandal Singes Foundry This is good news. BJ was never the conference call numbers guy. He is an engineer. This takes a big load off of him so he can spend his time moving Foundry forward technically. This tells me he is letting go of his "child" realizing it has gotten big enough to play with the big boys and he needs to spread the responsibility of running this company around. Also with much less a hold on every aspect of FDRY I would imagine that the 800m collecting interest could be used for more exciting opportunities.
Pete Baldwin 12/5/2012 | 3:16:03 PM
re: Options Scandal Singes Foundry So .... should Foundry have replaced him as CEO, too?
Pete Baldwin 12/5/2012 | 3:16:01 PM
re: Options Scandal Singes Foundry If I'm reading the release right, Broadcom is reporting $2.2 billion in restatements between 1998 and 2005.

Granted, Broadcom is bigger than Foundry: 4200 employees vs. Foundry's 700. That's a lot more options to add up.
metroman 12/5/2012 | 3:16:00 PM
re: Options Scandal Singes Foundry Iipoed

Sometime you really have to listen to yourself... it generally brings a smile to my face when you wax lyrical about your beloved Bobby (perhaps have gave you some options to allow you to retire...).

This post really is the funniest of them all. Clearly the company sees the combined role of CEO and Board Chairman as a lacking the required transparency. They have taken the view that the overseer of the CEO should not be the CEO.

I am sure in your rose tinted world of BJ worship you could spin this as an elightened leader realising that he needs to release some responsibility to others, the rest of us see the truth. BTW, there is no need to be so gushing, we can all see he is doing a good job.

Iipoed 12/5/2012 | 3:13:13 PM
re: Options Scandal Singes Foundry yor're still and idiot. Sorry I got all the $$ and you are still stuck in your little cubicle.
metroman 12/5/2012 | 3:13:12 PM
re: Options Scandal Singes Foundry <yor're $$="" all="" and="" are="" cubicle="" got="" i="" idiot.="" in="" little="" sorry="" still="" stuck="" the="" you="" your="">

I'm an idiot with a spell checker, decent english and a good point.

If you want credibility, perhaps you should get to the golf course. If you stay here you run the risk of making an even greater fool of yourself. Just take a minute to read what you have written in this thread, you are living in a world of your own.

goundan 12/5/2012 | 3:13:10 PM
re: Options Scandal Singes Foundry Is lipoed the new BobbyMax or was he always the man behind the BobbyMax nick?
Iipoed 12/5/2012 | 3:13:04 PM
re: Options Scandal Singes Foundry another knucklehead pipes in. why are you not working in your cubicle instead of wasting time on this boarda during working hours. Sure your employer does not mind.
Iipoed 12/5/2012 | 3:13:04 PM
re: Options Scandal Singes Foundry What have you done worthwhile in this industry? obviously nothing as you spend most of your time responding to my 3 or 4 posts a year. Since you obviously know who I am at least you must admit I know what I am talking about re: fdry
of 5 years ago. As to spellchecker who really cares. You got the message. As to past posts what have you written other than jealous attacks of people way beyond your level of intelligence.
metroman 12/5/2012 | 3:13:03 PM
re: Options Scandal Singes Foundry I am sure you were excellent as a "one trick pony". Can I suggest some anger management classes as you seem a little stressed?

PS - the sunrise is beautiful from my corner office this morning.
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