Stuart Nichols, the man who wouldn’t act as “war-time counselor” to KLA-Tencor’s then chief executive Ken Schroeder in his battle to win battles for talent during the bubble years using questionable stock option practices, surfaced Monday as the new chief lawyer for MIPS Technologies.
Nichols resigned as general counsel at KLA-Tencor last year the same day that the company “terminated” its employment agreement with its former CEO in the wake of an investigation that uncovered misdated stock options. It was also the same day that the company’s founder and chairman, Ken Levy, chose to “retire”.
Nichols authored a “Stock Options Pricing” memo sent to Schroeder in March 2001 warning him that selecting grant prices with hindsight required the company to take a compensation charge, and that doing so without disclosing the fact could run afoul of the law, according to a civil action filed by the SEC against Schroeder in July.
In an e-mail reply, Schroeder asked Nichols to “Help me, don’t just tell me how to follow a strict interpretation of rules. I need a “”war-time counselor,” not someone who can recite page and verse.” Schroeder’s behavior continued as late as 2005, despite legal advice from Nichols that doing so was against the rules, the SEC alleges.
In August, the SEC accused KLA’s former general counsel prior to Nichols, with intentionally misdating ”dozens” of grants between 1997 and 2003 and of providing KLA a guide on how to backdate options when she left the company in 1999 to join Juniper Networks.
Nichols’ new employer had its own brush with option-backdating practices and took a charge of $46 million to account for mispriced options granted from 1999 through 2003 when it finally filed its 10-K for fiscal year 2006.
Nichols, who will be paid $250,000 a year and be eligible to receive a bonus of between
$100,000 and $200,000 a year, will also be given an option for 250,000 shares of MIPS, according to his offer letter. The timing of their grant date is meticulously spelled out in his Nov. 14 offer letter from the company’s chief executive: “Currently, new hire options are granted on the last Thursday of each month and are priced using the market closing price on that date.”
That would be Thursday, Nov. 29, a date that will nevertheless be rather well-timed: MIPS shares touched a 52-week low Monday of $5.69.