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General counsel took major shrapnel during the stock-options backdating scandal in 2006 as several companies-including CNET Networks Inc., Comverse Technology Inc. and McAfee Inc., to name a few-fired or otherwise jettisoned their GCs when they came under suspicion of stock-options manipulation. Government authorities, moreover, have singled out corporate counsel as prosecution targets given their role as ethical gatekeepers. But for Novell Inc.’s Joseph LaSala, 2006 was a banner year. Novell recently gave LaSala a $350,000 bonus for “exceptional contributions” to the business-even as the company remained in the middle of an internal investigation into backdating that was launched in August. Novell CEO Jack Messman and Chief Financial Officer Joseph Tibbetts Jr. both stepped down in June. The company said the departures had nothing to do with Novell’s ongoing backdating investigation. In 2002, Messman was the sole member of the company’s stock-options grant committee for nonemployees, according to an SEC filing, a structure found at other companies under the backdating cloud, such as Brocade Communications. LaSala has been Novell’s GC since 2001. In August, Novell initiated a review of its “historical” stock-options practices in light of “preliminary findings” and “news about the stock option practices of numerous companies across several industries.” The company did not indicate what time frame is at issue. A Novell spokesman later indicated the review would cover grants received by both employees and directors. LaSala and Novell declined to comment on the bonus beyond the sparse wording of a U.S. Securities and Exchange Commission (SEC) filing. Named as defendant A shareholder derivative suit against the company names LaSala as a defendant and faults him for personally receiving options on Dec. 15, 2003, to buy 137,500 shares at $9.42. By early February 2004, the lawsuit points out, the stock had increased in price by 49%. However, the mid-December date that LaSala received the grant falls during a period when the company has regularly awarded options to him, according to SEC filings. Indeed, LaSala’s recent $350,000 bonus came in mid-December as well. Further, Novell has enjoyed two recent major legal successes with LaSala. The first was getting Microsoft Corp. in 2004 to pay $536 million to settle a legal dispute over a Novell operating system. The second was striking an agreement with Microsoft last November wherein both sides agreed not to sue each other for patent infringement.

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