But their have been numerous other lawsuits stemming from that messy chapter in United’s history too. And while many have been settled, the legal bills are continuing to pour in, judging by the company’s recent proxy. Last year, for example, the company spent $16.8 million to cover the legal costs of current and former executives and directors. While that’s down from the $23.3 million spent in 2007, together with the money spent in 2006, it makes for nearly $50 million in legal expenses.

As the company notes in its filing, United is required to cover the legal costs for current and former officers and directors under Minnesota state law.

UPDAT: The Am Law Daily has its own interesting take on United’s disclosure and suggests that most of this money has been spent defending McGuire.

On a separate note, our friends at Consumerist are down to the Final Four for the worst company in America. Be sure to cast your vote though it’s hard to imagine AIG not winning this one in a landslide.

And one final note: the SEC is streaming a day-long round-table on short selling. We’ll be listening in for interesting tidbits. Here’s the agenda for today.

The culprit was misdated stock options. In a February 8-K, TeleTech announced the results of an internal review of option grants from the company’s 1996 IPO through August 2007, finding lots of mistakes but “no willful misconduct.” (A relief, presumably, for Chairman, CEO and founder Ken Tuchman, who owns about 45% of the stock.)

On Wednesday TeleTech filed its 2007 third quarter 10-Q, 2007 10-K and 2008 first-quarter 10-Q. These provide details on the options investigation (which, BTW, cost the firm $8.6M last year and will probably eat up another $10M this year.)

If we eliminate misconduct, we find ourselves in the land of cluelessness, sloppiness and ineptitude. Out of 4,886 grants, 3,021 had incorrect grant dates, including all of the 2,330 routine yearly grants made from 1999 to 2006, amounting to 6.5 million options. There were other goofy mistakes, like recording option grants for folks who were no longer on the payroll. (The report blames “administrative delays,” plus the fact that no one bothered to inform the plan’s administrator these employees had departed.) And the firm’s options accounting treated some consultants like employees.

As in many of these options messes, the compensation committee’s use of “unanimous written consents” instead of real meetings (and befuddlement over who had authority to make grants) led to massive confusion about the dates on which options were officially granted. The investigators had to reconstruct the circumstances behind every grant to figure out the “appropriate” date (and hence the real exercise price) for each one. The company admits that some dates “could not be determined with certainty.”

Mercifully, all this fuss resulted in a pretax compensation charge of only $59M. But the SEC and IRS are still investigating.

TeleTech is in the field of business process outsourcing. “We help Global 1000 companies …improve quality and lower costs by designing, implementing and managing their critical front and back office processes,” says its 10-K. But when it comes to its own stock options, process doesn’t seem to be TeleTech’s strong point.

Note from Michelle: Footnoted friend David Milstead first wrote about TeleTech’s options problems here and also here when the results of the investigation were first announced.

Anyway, the backdating story lingers in certain quarters. American Tower Corporation (AMT), the cell tower company whose over-the-top backdating practices caused it to hit the investigatory jackpot (the SEC, the Justice Department, the IRS and the Department of Labor are all on its case), revealed a new development in its 10-K, filed Friday. The company says it’s “become aware” that the SEC has bestowed a Wells notice on one of its former officers, signaling a likely enforcement action against this unidentified Mr. or Ms. X.

An interesting development, in light of the fact that the special committee of American Tower’s board that originally looked into the backdating matter used its legal power over “derivative” lawsuits to ward off a shareholder suit naming former officers and directors. As noted in the last 10-Q, the committee decided such a suit wasn’t worthwhile, but it looks like the SEC sees things a little differently.

Friday brought the news that former Chairman/CEO Don Tyson and other insiders had settled the 2-year-old shareholder lawsuit over stock option springloading and other not-so-kosher practices at Tyson Foods. The D&O Diary blog has a nice write-up on the stock option stuff; here I’ll focus on parts of the settlement that are getting less attention.

While “vehemently denying any wrongdoing whatsoever,” Don Tyson and Tyson Limited Partnership agreed to fork over $4.5M plus at least another $1M for the plaintiffs’ legal fees. And Tyson Foods agreed to start doing a few things differently, at least for the next 7 years:

- Refreshingly, new business dealings between the company and the Tyson clan will now be a no-no. Exceptions can be made only if the board’s independent governance committee decides (unanimously) that it’s impossible to find “reasonably equivalent transactions on reasonably equivalent terms” with an unrelated party, or there are other “special or exigent circumstances.” And if they allow any related transactions, they’ll have to announce that in the proxy. (Some firms take the view that business deals with insiders are A-OK as long as the terms are similar to what they’d be with an outsider. The Tyson settlement sets a much tougher standard, and the firm will need a darn good reason to engage in corporate incest.)

- The company has to pay either KPMG or Deloitte to help it do a better job of disclosing any related party transactions.

- Tyson’s board must establish an independent nominating committee, appoint a lead independent director, and replace one of the 5 current inside directors with an independent one.

- And my personal favorite: Each year, around a month after the annual meeting, CEO Richard Bond and the lead independent director must invite the company’s largest shareholders to a kaffeeklatsch and listen politely while they complain.

The settlement awaits court approval.

I must say the font Dell used in these filings is easy on the eyes, and the CD&A in the proxy contains a lovely 3-D pie chart. What I’m trying to say here is: This is way too much information for one human being to comb through quickly, especially at a blogger’s pay rate. (Footnoted’s smart accounting friend, Jack Ciesielski, tackles some other issues related to the filing here.)

One thing I noticed before my eyes glazed over is that Dell plans to pay out some unusual cash compensation, totaling $113 million, when it finally files its 10-K for fiscal 2007. You see, the company has suspended stock option exercises until the 10-K gets filed, and during this suspension some options have expired. Dell’s compensation committee (which likes to call itself the Leadership Development and Compensation Committee) apparently feels sorry for the option holders and has decided to give them cash to make up for the expired options, measured by the “in-the-money value of the options at expiration.” This includes executive officers who have left the company.

Because these cash payments are in lieu of unexercised stock options, the committee won’t count them in determining someone’s regular compensation for the year.

People can debate the wisdom and fairness of this move. (Of course that’s not saying much, since people can debate anything.) Let’s at least hope none of this dough will go to anyone involved in the accounting shenanigans that created these delayed filings in the first place.

In both filings (first quarter and first 6 months), the company chose to list as a risk factor the “uncertainty” created by changing standards of corporate governance and disclosure. In particular, it griped that many “new or changed laws, regulations and standards are subject to varying interpretations…due to their lack of specificity.”

A bit nervy, perhaps. As this press release explained, Rambus was filing late, and for an all-too familiar reason: the conclusion of a stock option investigation. Between compensation expenses and the cost of the investigation, Rambus’s backdating adventures generated about $34M in charges for the first half of 2007, on top of $70M in related expenses and accruals already announced for 2006.

Of course, Rambus’s complaint about vague legal standards has validity. The rules public companies must live by are far from perfect; many are baffling, and some just plain silly. But Rambus would not be my nominee for official spokesman about such matters, given the past options practices its own internal investigation turned up (as described last month in a tardy 2006 10-K).

In a report that covered 1997 through 2004, Rambus’s Audit Committee said that “nearly all employees” got backdated options, and that in many cases the backdating was “intentional, not inadvertent” and was helped along by falsification of documents. The report also noted that some of the firm’s past CFOs and comptrollers “should have taken steps to become aware of the proper accounting rules for stock option grants.”

Sometimes, as is the case with granting and accounting for stock options, the rules are pretty straightforward and people just decide to break them. Or perhaps they just don’t bother learning them at all.

Well, yesterday, the SEC announced that Shanahan, and his son, Michael Junior, who happened to be on EASI’s compensation committee had been charged in an options back-dating scheme. According to the SEC’s complaint, the father and son team were skilled at back-dating options, netting $20 million “in unauthorized and undisclosed compensation”. An attorney representing the elder Shanahan told the WSJ that “At no time did the Shanahans, either Shanahan, ever intend to defraud anyone.” Back in March, a grand jury indicted EASI’s former CFO and the company’s former controller pled guilty in a deal with prosecutors.

It should go without saying that the Shanahans are innocent until proven guilty. But when a company drags its feet on disclosing a formal investigation, who knows what else they’re hiding. It’s also another reminder that having relatives on the compensation committee is usually one of the biggest red flags that exists.

Now, back to yesterday’s filing: footnote 20 “helpfully” explains that the $585K that VP for product development Don Jaworski received in “all other compensation” was primarily due to the $544K in cash that he received in January to “cancel a portion of his non-qualified stock option grant dated May 23, 2003. Though Jaworski received the largest one of these oddly named (or perhaps phrased) payments, he wasn’t the only one. Footnotes 5, 10, 15, and 26 (quick brain-teaser: which number doesn’t fit the pattern?) disclose similar payments to other executives for various canceled options. Unfortunately, the footnotes don’t provide enough information to really figure out what the payments are all about and how they’re related to Brocade’s stock option problems.

There’s also one other question about the odd footnotes: if Brocade’s fiscal year ends in October, why are they disclosing payments made in January 2007 in the proxy? Perhaps it’s an attempt to put the scandal behind them by the time next year’s proxy rolls around. Or, maybe it’s yet another odd curiosity.

To be fair, this 8-K filed by E*Trade Financial (ETFC) was filed late last Friday, so technically it was a 2006 filing. As footnoted.org regulars know, anything filed late on a Friday, particularly before a holiday weekend, usually means that the company is trying to bury something. But in the filing, E*Trade said that its compensation committee had decided to eliminate the tax gross-up that executives would receive following a change-in-control both in 2007 and in all years going forward. That’s definitely worth a gold star.

Footnoted.org’s position on tax gross-ups should be well known: they’re pretty gross. If you happen to make a lot of money through a merger or some other event, you ought to be able to afford some skilled legal/accounting talent to help you minimize the tax burden. Companies that provide these gross-ups are simply enabling greed by removing a key incentive to donate to non-profits and charitable causes as a way to minimize a hefty tax bill.

The second gold star goes to Keithley Instruments (KEI) which filed its proxy yesterday. Like many companies, Keithley is in the midst of the stock options backdating mess. In the compensation committee report, the committee said that as a result of the “costs and management time incurred by the company” on the back-dating investigation, neither Chairman and CEO Joseph Keithley nor CFO Mark Plush would receive a 2006 bonus or a salary increase and options for 2007. Thanks to a reader for pointing out this change — we can only read so many filings and things are bound to slip through the cracks.

One can only hope that two gold stars on the first Friday of 2007 is a positive sign of things to come!

Sculptures: I would like to purchase two sculptures that decorate my former office or that the Company retails. The Company will sell me the 3CPO sculpture that was in my former office for $7,500 (which is 50% of its retail price of $15,000) and a Superman for $2,500 (which is 50% of its retail price of $5,000), for a total of $10,000, which I already have paid to the Company. I will pay the Company the cost of shipping Superman to me, within 30 days after this Agreement becomes effective. I may take the 3CPO model from the Company’s office (or have it picked up at my own expense), and the Company will ship a Superman to me.

While it’s good to see that Thalheimer is paying something for the sculptures, it’s hard to argue that the company’s performance under his watch was anything approaching super. When he stepped down in late September, the company was in the midst of an options-backdating probe and same store sales were down dramatically. And if you’re curious about what a $5,000 Superman statue looks like, here’s a link.

Of course, the statues aren’t the most valuable part of the agreement. There’s also $1.7 million worth of severance, another $3.9 million in retirement benefits and $300K to cover the cost of office space and secretarial support for the next three years. But Thalheimer’s agreement wasn’t the only one filed late Friday. The company also filed this agreement with former COO Tracy Wan and this agreement with former CFO Jeff Forgan, both of whom stepped down in early November.

The markets may be closed today and these agreements were technically filed last year. But we think this sort of thing shows that we’re off to a great start for 2007!