SiliconBeat

McAfee, the Santa Clara security software developer whose former top lawyer was acquitted earlier this month of of illegally tampering with his stock option grants to boost his pay package, filed a 15-page, 4,100-word document Friday outlining proposed steps it will take to improve its corporate governance. The plan is part of a proposed settlement of pending lawsuits filed related to the company’s historical stock option practices.

Last December, on the eve of the Christmas holiday weekend, McAfee filed restatements of past results to account for an additional $137.4 million in non-cash stock based compensation charges for the years 1995 through 2005.

Among the steps recommended:

• limiting directors to five years of service on the compensation committee and limiting to two the number of directors that can serve on both the compensation and audit committees;
• granting stock options only at “regularly scheduled dates”, to be set by the compensation committee;
• notifying all shareholders holding 5 percent or more of its stock of the “commencement of the annual  process” of receiving investor input about nominations to the company’s board;
• instituting a claw-back provision under which the board will seek “disgorgement” of any part of a bonus or other performance-based compensation of either the CEO or CFO during the year following the publication of financial reports embodying errors “due to the gross recklessness or intentional misconduct of the responsible executive.

In addition to the proposed corporate governance measure, the company froze option exercises for some executives, including 1,235,000 stock options held by the company’s former chief executive, George Samenuk, and 494,792 options held by former President Kevin Weiss, which they were not allowed to exercise before the options expired. The company estimated their combined value at $30 million.