Stock scandal claims the heads of Valley chief execs

Five Silicon Valley senior executives have lost their jobs in a widening stock option scandal that threatens to engulf some of technology's biggest names. Two chief executives were amongst those who left or were fired.

George Samenuk, the chief executive of security firm McAfee, and Shelby Bonnie, chief executive of technology publisher CNet Networks, left their jobs after investigations by their companies into allocations of stock options.

Bonnie will retain his seat on the CNet board. Two other CNet executives also resigned following the investigation which found that a series of executives bore "varying degrees of responsibility for these deficiencies".

It has emerged that a number of Silicon Valley companies have operated policies of backdating stock options. Options are the right to buy shares in a company for the price of the share at the time the option is issued. If the share price rises the difference is pure profit for the option holder. They have become a significant part of the technology world's pay structure.

Because technology share prices have generally risen over time, backdating options effectively makes them more valuable to the holder. Though commonplace, the practice is just now coming to light and enraging shareholders and analysts.

The scandal has so far involved 120 companies, most of them technology firms, including household names such as McAfee and Apple Computer.

The scandal has major implications for the balance sheets of the companies involved. McAfee said that it would restate 10 years' worth of earnings at a cost to the company of $100 million to $150m.

"I regret that some of the stock option problems identified by the special committee occurred on my watch," said a statement from McAfee's Samenuk. "I am proud of the accomplishments of the McAfee team in serving our millions of customers during my tenure."

"I apologise for the option-related problems that happened under my leadership," said CNet's Bonnie.

The resignations and firings have come as a result of internal investigations, but there are some government investigations taking place.

The biggest name to be involved in the scandal so far is Apple founder and chief executive Steve Jobs, who said earlier this month that he had received backdated options which had given him an immediate profit on paper. An internal company review said that he had not acted improperly.