Diligent sees no need to restate earnings after review of executive options

Diligent Board Member Services, whose shares have more than doubled in the past 12 months, says it sees no need to restate earnings after reviewing a report into executive options that may not have complied with its incentive schemes.

The shares, halted pending the report, will resume trading today.

“At this time, the Diligent Board, based on advice received from its advisors and the position of its auditors, does not consider that there is a need for Diligent to restate its financial statements,” it said.

“The amount of expense to be recognized in future periods as a result of the cancellation and any replacement of the previously disclosed affected options will be determined after resolution of such matters, the company said.

The company, whose Diligent Boardbooks software helps directors to manage corporate governance information flows, had its stock halted this week pending receipt of the report from an accounting firm. Diligent set up a special committee in December after being notified that some options and shares granted to executives may not have complied with the relevant incentive plans.

Last month Diligent said the committee had found that a 2009 award to chief executive Alessandro Sodi exceeded the cap in the 2007 Plan by 1.6 million shares and a 2011 award exceeded the cap in the 2010 Plan by 2.5 million shares. A 2011 award to another executive exceeded the cap in the 2010 Plan by 250,000 shares.

The committee also identified a number of instances where Diligent may not have been in compliance with New Zealand regulations such as granting stock options to employees in the absence of a prospective.

Shares of Diligent last traded at $5.35 on the NZX, valuing the company at $448 million. The stock traded at just 7 cents in March 2009.