The options scandal at Comverse Technology Inc. (Nasdaq: CMVT) took a new twist today when three key people announced their resignations from their posts at the company.
Kobi Alexander, a founder of the company, has resigned as chairman and CEO, David Kreinberg has left the post of CFO. William F. Sorin, a former director and senior general counsel, has also resigned.
Comverse Technology's announcement said that all three would become advisors to the company on an interim basis, and that they would cooperate with the special committee investigating the company's stock option grants.
It is important to stress that the management of subsidiary company Comverse, headed by CEO Zeev Bregman, remains in place.
Ron Hiram, an independent director of the company since 2001, has been named non-executive chairman of Comverse Technology in place of Alexander. Raz Alon, an independent director since 2003, has been named interim CEO. Avi Aronovitz, currently vice president of finance and treasurer of the company, has been appointed interim CFO.
Paul Robinson, currently vice president of legal and general counsel, will assume the role of executive vice president, chief administrative officer, general counsel, and corporate secretary.
"We wish to acknowledge the past contributions of Mr. Alexander. He was the Company's founder and a visionary leader. We also acknowledge the work of Messrs. Kreinberg and Sorin in assisting Mr. Alexander in developing Comverse into the strong market and technology leader it is today," Hiram said.
Comverse Technology, which, through Comverse, provides software and systems enabling network-based multimedia enhanced communication and billing services, has a market cap of $4.58 billion.
Six weeks ago, Comverse issued a rather opaque announcement stating “the creation of a special committee of its Board of Directors composed of outside directors to review matters relating to the company’s stock option grants, including, but not limited to, the accuracy of the stated dates of option grants and whether all proper corporate procedures were followed. The committee will be assisted by independent legal counsel.”
The affair came to light following an investigation by the “Wall Street Journal” on the awarding of options at a number of companies. The “Wall Street Journal” raised questions about the dates of options packages, after finding discrepancies in the options grants, especially those awarded to Comverse chairman and CEO Kobi Alexander. In many cases, Alexander received options at the share’s low price over an extended period. The “Wall Street Journal” said that, statistically, the chances of such a structure being a random occurrence were one to six billion. It is not possible that Alexander and other executives received time and again options at the lowest exercise price.
Comverse has not yet published its financial report for the fourth quarter of 2005, because of the storm it has found itself in. Consequently, the company has not published its 10-K form, its expanded annual report. The company was due to file this report with the US Securities and Exchange Commission (SEC) no later than two weeks ago, but since Comverse is not even close to concluding its investigation, it has not even applied for a 15-day extension to which it is eligible under the circumstances.
Alexander today sent a letter to all Comverse employees worldwide. The text to the company’s headquarters staff in Israel reads as follows:
Dear Employees,
After 25 years of devoting my life to Comverse Technology and its employees, I an resigning today as chairman and CEO of the company.
I leave with deep regret, but also with fond memories and great pride in our achievements. Over the past 25 years, we’ve grown from a start-up to a leading global company with over 6,000 employees worldwide, and with over $3 billion in assets. These achievements are the fruits of your great efforts and dedication. I thank you for your great contribution to our success, and call on you to continue to develop the company from the solid foundation we have today.
Together, we built an enterprise that has no counterpart in ability and talent, which is ready for future challenges and opportunities. I am confident that our success will be preserved and continued. Comverse’s leading position in the market, financial standing and the unique capabilities of its people are of the highest standard. You should be proud to be a part of this company.
With warm personal regards,
Kobi Alexander
Published by Globes [online], Israel business news - www.globes.co.il - on May 1, 2006
© Copyright of Globes Publisher Itonut (1983) Ltd. 2006