For Amylin Pharmaceuticals Inc., 1998 was a rough year. Poor results in a series of clinical trials caused the company to lay off 80 percent of its workers. By Oct. 22, the company’s shares had fallen from $6.62 to a low of 31 cents.
The shares began to climb, though, as the company figured out what had gone wrong in the clinical trials.
On Dec. 11, when the shares were at 53 cents, up 71 percent from the low, the company notified the SEC that it had granted top executives options to buy 375,000 shares. The date it said the awards were made: Oct. 22.
All told, Amylin reported handing out more than 1 million options to executives that year. And on three of the five days they reported doing so, the stock was at a 90-day low (see Amylin chart).
The chances of that happening are roughly one in 22,000, according to an equation provided by Erik Lie, a University of Iowa Business School professor and an expert on stock options practices.
An Amylin spokesman did not respond to requests for comment. James Gaither, a prominent Silicon Valley lawyer who was a member of Amylin’s board — and sat on the compensation committee charged with overseeing option grants — didn’t return calls seeking comment.
Revelations of well-timed grants in the late 1990s are hardly isolated events these days. At least 87 other companies have already been publicly associated with questions about option grant practices, including many where the timing is far more fishy.
But a Recorder review of SEC filings for 17 companies that had Valley lawyers serving as directors found questionable grant dates for executives at five of them, none of which had been previously associated with backdating questions.