SiliconBeat

West Marine received notification from the SEC Jan. 14 that the agency’s informal inquiry begun in August into facts surrounding West Marine’s restatement of financial results “will continue under a formal order of investigation,” according to an 8-K filing Wednesday.

In May, West Marine completed a restatement financial results for fiscal years 2002 through 2005 and for the first three quarters of fiscal year 2006 related to inventory issues.

The SEC’s original informal inquiry began in August, and West Marine provided materials about the restatement to the agency in October, when we first flagged the news. The SEC staff then requested “additional materials relating to our inventory accounting practices from 2001 to 2006, among other things.”

West Marine shares are down 18 percent so far this year after losing nearly half their
value in 2007, as the company struggles with declining year-over-year sales for the past four quarters.

OK, this is a cheap item, we admit. But we were amused by the discussion of the compensation committee of Apple’s board regarding its chief executive’s pay in the company’s proxy released today.

Steve Jobs has received a $1 salary every year since he rejoined the company in 1997. In 1999, the company “awarded” Jobs an aircraft as an executive bonus in recognition of his outstanding performance” during the previous two years.

They paid Jobs $776,000 last year to remiburse him for expenses of operating his jet when it was being used for Apple’s business purposes.

Jobs was also awarded two large stock option grants, both of which became subjects of speculation about backdating, but both were cancelled in March 2003, when the board gave him 5 million shares of restricted shares instead.

Those shares, which became 10 million when the stock split in 2005, vested three years later, with the stock price having risen eight-fold during that time. Jobs gave up nearly half of them to pay taxes on the grant and he continues to hold the remaining 5.4 million shares.

In August he also exercised his option to buy 120,000 shares that were set to expire and continues to hold them.

The value of Jobs’ Apple shares, which were worth as much as $1.13 billion at one point on Dec. 27 when its shares touched an all-time high, ended Wednesday at $771.4 million, after Apple shares fell $16.57, or 10.7 percent, to $139.07.

In its discussion of his pay, the committee writes: “Because Mr. Jobs’s continued leadership is critical to the Company, the Compensation Committee is considering additional compensation arrangements for him.”

Atiq Raza, a former president of AMD, agreed to pay nearly $3 million to settle insider
trading charges brought by the SEC related to knowledge he allegedly netted nearly $1.5 million using information gained as a director on the board of OrthoClear regarding the outcome of litigation with a competitor, according to a release from the SEC.

According to the Commissions complaint: “On the night of September 19 and the early morning of September 20,2006, OrthoClear’s CEO informed Raza about a confidential agreement that OrthoClear had reached with Align to resolve ongoing and contentious litigation between the two companies. As part of the settlement, OrthoClear agreed to no longer compete against Align in the transparent teeth-straightening market. On September 22, Raza purchased a large number of Align call options securities
that would increase significantly in value if Align’s stock price rose in the short term.
When Align announced the settlement with OrthoClear the following week, Align’s stock price rosenearly 50%, allowing Raza to realize profits of $1,450,900.”

“Mr. Raza, as a member of OrthoClear’s board of directors, was obligated to protect
confidential company information.  Instead, he violated the trust of his company by using the confidential information for personal gain and, in doing so, he also undermined the level playing field of our capital markets,” said Marc J. Fagel, Co-Acting Regional Director of the Commission’s San Francisco Regional Office in a prepared statement.

Raza joined AMD in 1996 as chief technology officer when AMD acquired chip design firm NextGen, and with it the technology that made the AMD K-6 processor line a success. For a time he was being groomed to eventually become AMD’s chief executive to replace AMD founder Jerry Sanders. Raza left the company in 1999 to start a venture capital fund and founded Raza Microelectronics in 2002 to make communications chips.

Without admitting or denying the allegations, Raza agreed to a settlement under which he will pay nearly $3 million in disgorgement and penalties, be barred from serving as an officer or director of a public company for five years and be permanently enjoined from future violations of the federal securities laws.

If we are reading this press release correctly, Cisco Systems announced an initiative to
invest up to $1.5 billion worth of of information and communication technology in the United Arab Emirates over the next five years. The investment is intended to “support the 2015 vision of His Highness Sheikh Mohammad Bin Rashid Al Maktoum,” who is the vice president and prime minister of the UAE and “ruler” of Dubai, and to fuel the nation’s growth and development plans.

And presumably sell a bunch of Cisco equipment and services in the process.

Cisco said that as part of the “investment,” which it expects to create over 650 new jobs by 2010, the company will open a new regional headquarters office in Dubai this April,
that will host one of the company’s “most advanced customer briefing centers,” allowing Cisco to showcase its latest wares. Cisco will also open an office in Abu Dhabi in June 2008 to serve the growing customer base in the country’s capital.

“Unburdened by legacy technology, the UAE is able to deploy the most advanced IP solutions, placing the country at the forefront of the Internet economy,” said Paul Mountford, Cisco’s president of emerging markets said in a statement.

Ah, to be unburdened by legacy technology! There are lots of places in the world like that, but few of them as wealthy.

OK, we are straying a bit from our usual focus on news about companies in Silicon Valley, but we got a call from a parent of a UC Berkeley freshman who received some nasty news near the end of winter break.

It seems their Cal student is on the verge of being sued by the Recording Industry Association of America for activity “on a particular IP address (that) infringed one or more of the RIAA members’ copyrights.” The parents were told that their student was one of 18 targeted with the same action.

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Batten down the hatches, Gilead Sciences share holders. Tuesday might be an interesting trading day. The company announced Monday in a brief press release that it’s recently hired chief financial officer Caroline Dorsa resigned the job she assumed two months ago “to pursue another opportunity.” The announcement comes two days before the company is scheduled to release its 2007 fourth quarter and fiscal year results, and a week after Gilead shares hit a 52-week high of $49.05.

Dorsa came to Gilead after her previous employer, business software supplier Avaya, agreed to a private equity buyout. Before that she spent twenty years in finance positions at pharmaceutical giant Merck.

She replaced John Milligan, Gilead’s chief operating officer, who will take over the CFO
duties, which he performed from 2003 to 2007, “effective immediately.” The the time of her appointment Milligan stated, “”Caroline has successfully led and managed in a range of financial roles and responsibilities, and her experience will be invaluable to Gilead as we navigate the continued growth of our company.”

Nevertheless, the company did manage to value her experience to the tune of a $500,000 salary and a $250,000 signing bonus. Gilead also gave Dorsa a “relocation package” that included a “mortgage subsidiary in the amount of $190,000, reimbursement of moving and relocation expenses up to $50,000 in the aggregate, reimbursement of certain transaction costs (such as commissions, closing costs and points) incurred in connection with the sale of her current principal residence and the purchase of a new residence, a temporary housing allowance and a tax gross-up relating to certain relocation expenses. Ms. Dorsa will be obligated to repay her signing bonus and the relocation package, should her employment terminate under certain circumstances prior to November 5, 2009.”

We look forward to reading the SEC filing that should give details about her going-away
package to see whether or not her early leaving constitutes one the “certain circumstances” that would cause her to have to repay the company. The SEC, like the rest of the federal government is closed today for the Martin Luther King Jr. holiday.

Silicon Storage Technology (SST) finally became up to date in its financial filing requirements with the SEC on Friday when it posted its quarterly 10-Q reports for the first three quarters of 2007. That followed the filing on Wednesday of its long-delayed 10-K report covering fiscal 2006, which also contained a summary of the findings by the chairman of its board on his investigation into the company’s historical stock option practices.

The picture isn’t pretty.

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On Wednesday, XenoPort, the Santa Clara biopharmaceutical company working with the British drug maker GlaxoSmithKline on an experimental drug to treat restless leg syndrome, corrected its SEC filing of the day before to nearly double the percentage of patients in a clinical trial of the drug who withdrew from it because of “adverse events.”

Oops.

On Tuesday, the companies said that 7 percent of the 327 patients in the single-blind phase of the trial for the drug candidate called XP13512 withdrew from the study complaining of things such as sleepiness and dizziness. In fact, the correct number was 13 percent.

The company also had to raise the percentage of people in the same trial phase who withdrew from the study citing no effect from 2 percent to 4 percent.

Nevertheless, the “top-line” results of the trial remained unchanged, showing that the drug was “generally well-tolerated” and displayed “a statistically significant difference
between the percentage of patients treated with” it and a placebo.

Two weeks ago in this space we wrote about a $100,000 pay raise for Sehat Sutardja, co-founder and chief executive of Marvell Technology, along with a stock-based bonus and new option grants given him good for 415,800 shares, according to a company filing with the SEC on the first business day of 2008.

We found it particularly interesting coming on the heels of four quarters without a net
profit, a 400-person layoff announced in November, an investigation into historical stock
option practices that revealed a pattern of backdating, and a 27 percent drop in its share
price in 2007.

Evidently, Sutardja had some second thoughts himself. A week after our post on the raise, the executive compensation committee of Marvel’s board reduced his annual salary from $657,000 to $1, at Sutardja’s request, according to an SEC filing Wednesday. His brother, Pantas Sutardja, who serves as the company’s chief technology officer as well as its acting chief operating officer, also requested a reduction in pay from $400,000 to $1 a year.

Also asking for a pay cut was the CEO’s wife, Weili Dai, a “nonexecutive” employee, who
asked that her $220,000 salary be reduced to $1. Dai stepped down as the company’s COO in May after the company’s investigation into past stock option practices revealed that a stock option committee on which she and her husband were the only members was found to have never met, and that minutes reflecting such meetings were “false”.

Shares of Marvell, a semiconductor company based in the Bermudas that operates out of Santa Clara, hit a new 52-week low Wednesday of $10.30 before ending the day at $10.98. The have dropped more than 20 percent so far this year.

Adobe Systems board of directors changed the voting standards for their own election last week, according to a filing with the SEC Tuesday. In uncontested elections, a nominee must now receive more “for” votes than “against” votes. In the past it did not matter how many votes were cast against an uncontested nominee.

Exactly why a company would ever have allowed “against” votes in an election, but not count them as binding on the results, we don’t pretend to understand.

But elections to the board room aren’t as simple as that. Should a majority of shareholders vote against an incumbent nominee, they had to hope that the rejected nominee take that into consideration and turn in a letter of resignation to the board.

The company also added a provision requiring that any future director nominees proposed by shareholders also “deliver a statement that, if elected, they agree to tender an irrevocable resignation” if they fail to received the required vote in subsequent elections.