Children’s Place Finds Option Errors

SECAUCUS, N.J. (AP) — Children's Place Retail Stores Inc., operator of the Children's Place and Disney Store chains, said late Thursday it found errors in the dating of some stock option grants, and will delaying filing its second-quarter results to complete an internal review.


The company said outside counsel conducting the probe found various instances in which the company's records did not correctly reflect the legal grant date for stock options granted to employees and directors, resulting in errors in the dating of these stock options.

The errors were deemed unintentional except for one occasion in 2001, on which findings were inconclusive.

Children's Place said it is analyzing the accounting treatment of its grants going back to the company's initial public offering in 1997 to assess what corrections may be needed. Potential financial impact of the corrections have yet to be determined.

Dozens of U.S. companies have disclosed that their stock options practices are being investigated internally, or by the Department of Justice and Securities and Exchange Commission, for a practice known as backdating, in which stock options are issued retroactively to coincide with low points in a company's share price. Such a move can fatten profits for options recipients when they sell their shares at higher market prices.

Backdating options can be legal so long as the practice is properly disclosed to investors and approved by the company's board, experts say. But backdating also can runafoul of federal accounting and tax laws in some cases.

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