But that’s not the only issue raised by these options. Less than a month after the grant, Novell announced exceedingly rosy financial figures from the previous fiscal year. From a nadir of $16.69 on the grant date, the stock eventually hit $39.94 by the end of December.

Ultimately, the options would become worthless before vesting due to the tech market crash.

Nevertheless, the series of events makes experts wonder whether the grants were also “spring-loaded” � that is, intentionally issued just before positive disclosures that the board knew would impact share prices. The SEC does not seem to view spring-loading with nearly the same severity as it does backdating, but the practice still troubles many experts, especially in this case.

“It doesn’t smell good,” said Boalt Hall School of Law professor Jesse Fried, an expert in corporate governance and insider trading. “This was at the annual low and was an off-cycle grant, and it’s highly likely that this was spring-loaded.”

Neither Sonsini � who left the Novell board in 2002 � nor a spokeswoman from the firm he chairs, Wilson Sonsini Goodrich & Rosati, would comment for this story.

On Aug. 29, though, Novell announced it was reviewing its option grant practices, and that the audit could lead to a restatement of past earnings under SEC rules governing executive pay.

“It’s a comprehensive review,” said Novell spokesman Bruce Lowry. He wouldn’t comment on the ongoing work being done by lawyers at Morgan, Lewis & Bockius. Linda Griggs, a partner at the firm who is working on the probe, said Friday she was too busy to comment.

Optional Reading

Read The Recorder‘s roundup of the stock-option backdating scandal. There won’t be a test later … but there might be a subpoena.

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