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It’s not clear whether the latest lawyer to go down because of stock-option backdating was involved in the actual decision to award suspect options. But a review of Securities and Exchange Commission filings shows CNET general counsel Sharon Le Duy did receive grants when the stock was trading at quarterly lows. CNET announced Oct. 11 that an internal probe found “deficiencies with the process by which options were granted at CNET, including in some instances the backdating of stock options grants” from 1996 through at least 2003. Le Duy and Chief Executive Officer Shelby Bonnie stepped down, along with the company’s human resources chief. The announcement also said “a number of executives of the company . . . bear varying degrees of responsibility” for backdated grants, though it didn’t specify who those executives are. Le Duy’s lawyer, Melinda Haag of Orrick, Herrington & Sutcliffe, says her client is in the clear.”Sharon did not participate in or know about any intentional misstating of stock options at CNET,” says Haag. But according to SEC filings, between 1999 and 2003, Le Duy received six options awards, and four of them came at quarterly lows in share price. The odds that four of six grants would come at quarterly lows is less than one in 880,000, according to an equation provided by Erik Lie, the University of Iowa professor whose research on options grants raised awareness of the backdating phenomenon earlier this year. The questionable grants given to Le Duy came in 2000, 2001, and 2003. And while they at one time had considerable paper value, Le Duy�like so many others during the tech boom�soon ended up having many of her options buried by a plummeting stock market. Share price was certainly on an overall decline in April 2000, when Le Duy received the option to purchase 30,000 shares dated April 17. CNET stock was trading at $24.62, which was its lowest price in well more than a year.The stock immediately jumped, hitting $31.50 within two days, and it surpassed $41 less than a month later. Later in 2000, Le Duy got a much larger grant�the option to purchase 60,000 shares�dated Oct. 18 and priced at $18.87. Leading up to that date, the company’s share price saw a steady decline. After bottoming out at $18.87, it immediately began rising, exceeding $30 on Oct. 26 before plummeting. Le Duy never got a chance to profit from these two option grants, as the company eventually exchanged them for a lower-priced award in 2003. The company did not exchange all of Le Duy’s options, though. Suffering like the rest of the tech industry, CNET saw its share price fall from more than $10 in August 2001 to $3.20 on Oct. 2. On Oct. 8�when Le Duy received 60,000 options�it was priced at $3.42.It then began a steady increase, hitting $9 by the end of November. It is unclear whether Le Duy ever exercised all of these options. A fourth grant, in 2003, also came at a quarterly low. After surpassing $5 in early June of that year, CNET’s share price hit $4.65 on June 24. On that day, Le Duy received the option to purchase 125,000 shares. While the grant doesn’t appear to have been backdated�it was reported to the SEC within two days of being awarded� it came before the company announced favorable financial results on July 22. The stock began a steady rise, hitting $7.34 by the end of July. “Sharon has always acted with integrity with regard to CNET’s stock options grant process and in all other regards,” Haag says. “Given that she was a senior officer for part of the time at issue, however, Sharon recognized that her resignation would best help the company move forward.” Le Duy joined CNET in November 1999 after serving as senior counsel for AirTouch Communications. Before that, she worked as an associate for Latham & Watkins, according to the CNET Web site. CNET’s attorney, Latham & Watkins’ Patrick Gibbs, referred questions about the reasons behind Le Duy’s resignation to CNET spokeswoman Sarah Cain. Cain declined to comment, saying that all information the company was ready to release was in the Oct. 11 press release. Le Duy’s departure came along with news that the chief executive of computer-security firm McAfee Inc., George Samenuk, the target of a federal stock-options accounting probe, also stepped down. McAfee general counsel Kent Roberts stepped down in May after an internal investigation revealed he had received an improper stock-option grant. In August, Northern California federal prosecutors sent the company a grand jury subpoena. Roberts’ attorney, Cooley Godward Kronish’s Stephen Neal, did not return a call seeking comment on the latest McAfee resignation. Justin Scheck and Jessie Seyfer are reporters for The Recorder, an ALM publication based in San Francisco.

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