Cyberonics said its chief executive officer and chief financial officer have resigned, effective immediately, after an audit found that "incorrect measurement dates were used for certain stock option grants" from 1999 to 2003. The Houston-based company didn’t say whether the resignations were related to the audit, and officials didn’t immediately return a phone call seeking comment. Cyberonics said its chairman and CEO, Robert "Skip" Cummins, will receive $1.7 million and 75,000 shares of stock as part of his resignation agreement. Pamela Westbrook, CFO and vice president, finance and administration, will receive $300,000 as part of her agreement. She will work with the company as a consultant and receive an accelerated vesting in options.
Cyberonics, which makes an implantable device system used to treat depression and epilepsy, said it will restate earnings by about $10 million for 1999 to 2003. It named Tony Coelho, a member of its board of directors, as chairman; Reese Terry Jr., a board member and one of its founders, as interim CEO; and John Riccardi, director of financial planning, as interim CFO. Cyberonics is one of numerous companies that have drawn scrutiny from the Securities and Exchange Commission for their stock-option granting processes. William McGuire, CEO of insurer UnitedHealth Group, is set to step down on or before Dec. 1 after an internal probe concluded that many of the stock-option grants he had received were surreptitiously timed to maximize their value.