Home Depot's $200 Million Error

The home-improvement retailer put a price tag on its incorrect accounting for options, but found "no intentional wrongdoing" by current execs  Story Tools post a comment e-mail this story print this story order a reprint digg this save to del.icio.us

The Home Depot Inc. (HD) announced that its incorrect accounting of stock options over the past 26 years resulted in around $200 million of unrecorded expense. But the Atlanta home improvement retailer also concluded that none of its managers had meant to do wrong.

The company's stock price dipped 1% to $39.52 per share in early afternoon trading on the New York Stock Exchange on Dec. 7.

Home Depot, which continues cooperating with the Securities and Exchange Commission and U.S. Attorney for the Southern District of New York's investigation into its stock option practices, said in August that its board had asked a subcommittee to review the matter. The team, with help of independent outside counsel, Hogan & Hartson, sifted through more than 3 million documents and interviewed more than 60 interviews with current and former officers, directors, and employees.

"The subcommittee concluded that there was no intentional wrongdoing by any current member of the Company's management team or its Board of Directors," Home Depot said in a press release late Dec. 6.

Home Depot plans to make the adjustments when it files its Form 10-K for the fiscal year ending January 28, 2007.

Home Depot is still reviewing the potential tax implications related to its accounting of stock options, but doesn't expect that part to have a material impact on its financial statements. The company says its $200 million of errors don't have a material impact either, and points out that the adjustment won't affect its total stockholders equity, which amounted to $27.8 billion as of October 29, 2006.

[original post: www.businessweek.com]