Despite scandals options still key, says Adobe exec

Despite stock options scandals, they remain important in attracting employees, said Adobe's president in an interview

Despite a series of high-profile executive firings and resignations connected with backdating of stock options that have shaken the U.S. technology industry in recent months, the president of one of the largest software makers believes they'll be little effect on the availability of stock option programs to employees.

Shantanu Narayen, president and chief operating officer of Adobe Systems, said in an interview in Tokyo on Thursday that stock options are too vital a piece of the package that Silicon Valley companies can offer potential employees.

"Options in the Valley have clearly been a mechanism by which people attract talented employees to come to their companies," he said. "What I can say is that the Valley has certainly benefited from options being one of the ways in which the vibrancy of companies in the Valley [has grown]."

"From our perspective, we look at options as a way of attracting talented employees. We cannot afford to be at a competitive disadvantage from other companies who are offering options to these talented employees," Narayen said.

"At the same time we are all seeing in the Valley more scrutiny about what that means in terms of dilution. And in Adobe's case we also work closely with our financial investors to make sure we have a balance between serving our shareholder needs while attracting effective employees. So I think overall the industry has seen a decline in the number or percentage of options issued as a percentage of the stock outstanding but it's that balance that I think companies have to measure," he said.

His comments came hours after Adobe announced the results of an internal investigation into its own stock options program. The review found "no fraud or intentional wrongdoing" but did uncover some issues. Adobe said the financial impact of these issues would be immaterial.

"We take out corporate governance very seriously and when the options issue first emerged we did an investigation into our executives' grants and we saw there was no issue associated with that. Then the board decided to continue to focus as we do on integrity, honesty and ethics and do a far more comprehensive [investigation]. We found no fraud and there were a couple of issues that, as we said, were not material," Narayen said.

On Wednesday McAfee fired its president, Kevin Weiss, and its chief executive officer and chairman, George Samenuk, resigned in the wake of a stock-options investigation at that company. McAfee said it expects to have to restate financial results over a 10-year period to record pretax non-cash charges of between US$100 million and US$150 million for stock-based compensation based on the findings of the investigation.

On the same day CNet Networks said its chairman and chief executive officer, Shelby Bonnie, resigned to take responsibility for his role in the backdating scheme that saw the company cut its financial forecast for this year.