Retailer Home Depot Inc. said Friday that the U.S. Securities and Exchange Commission had begun an informal inquiry tied to its stock-option practices and procedures.
In a federal filing, the Atlanta company said it intends to cooperate with the probe and expects no "material adverse effect" on its consolidated financial position or results of operations, noting that it cannot predict the outcome of the matter.
The top home improvement retailer said the U.S. inquiry relates to its disclosure from last week that in three cases before December 2000, stock options had been awarded to some executives at below market prices, with an internal company review showing unrecorded stock option expenses of not more than $10 million.
In a June 16 statement, Home Depot said it concluded there was no material impact on previously filed financial statements, and added it didn't intend to restate results for past periods.
The retailer also said that since December 2000, stock options had an exercise price based on the market price of company stock on a specified grant date, and added that it has found no instances where options were retroactively priced.
A number of public companies are facing federal investigations into possible manipulation of options grants to increase their value to staffers receiving them.
News of the informal SEC inquiry comes less than a month after Home Depot angered shareholders who showed up at its annual meeting in Delaware to find no outside board members present.
Chairman Robert Nardelli, under scrutiny by investors upset over his compensation package, did not conduct a separate shareholder question-and-answer session or review the retailer's performance at the meeting, items which had been mainstays at previous Home Depot annual meetings.
As criticism mounted in days after the meeting, Home Depot announced that all directors would attend the 2007 shareholder gathering. The retailer also said it would return to its traditional format for those meetings, including a business overview and time for shareholder questions.