Disney Says Pixar Backdating Was Legal

In August of last year, the Securities and Exchange Commission (SEC) began looking into the possible illegal backdating of stock options issued to Pixar employees, including principles John Lasseter and Ed Catmull. The Walt Disney Co. also launched an internal investigation and today chairman of the board John E. Pepper, Jr. issued a statement saying Pixar’s stock option practices were on the level prior to the Disney purchase.

‘The Committee and Board have concluded that while options were backdated at Pixar prior to the acquisition, no one currently associated with the company engaged in any intentional or deliberate acts of misconduct.’ Pepper states. ‘The board further determined that Disney should address the additional income tax liability issues facing Pixar employees who hold such options, including participating in programs established by the IRS and the State of California to facilitate the payment of such taxes on behalf of employees. The company expects that the impact associated with remedying these tax issues will not be material to the Disney financial statements.”

Pixar filings showed Catmull and Lasseter received one million and two million options respectively on Dec. 6, 2006, when the stock price was at a low for the period. The stock then went up more than 20% a couple weeks later, and was up approximately 50% by the end of January, possibly yielding a windfall of as much as $12 million for Lasseter and $6 million for Catmull. Also under suspicion were stock options issued to Lasseter in 1997, just before Pixar inked its first deal with Disney.