SEC looks into THQ's stock options

Add THQ to the list of companies involved in the ongoing Securities and Exchange Commission (SEC) examination of stock option granting practices. The publisher of WWE and SpongeBob SquarePants games yesterday confirmed that the SEC had issued an informal inquiry for information about how it doles out the grants.

THQ said that it is complying with the request and that a voluntary internal investigation into its stock options is already under way. The decision to examine its own practices was made after seeing numerous reports in the media and analysts' reports about option abuses at other companies, the publisher indicated.

Last month, both Take-Two Interactive and Activision confirmed that they were cooperating with the SEC on stock option issues. However, where Take-Two said it was undergoing the scrutiny of an informal, non-public SEC investigation into its practices, Activision said only that it had received a "letter of informal inquiry" about its stock option grants. Both Take-Two and Activision have been sued by shareholders alleging backdating of stock options.

When executives are granted stock options, they're given the right to buy shares in company stock at a fixed price, with the right to exercise those options--buy the shares--over a predetermined period of time. The price is set based on the stock's current market value at the time the options are issued. Recently, a number of corporations have come under investigation for having executives backdate their options, altering the records of when the options are issued to a low point for the company stock, thus maximizing their value.