CORRECT:SEC Drops Backdating Case Against Ex-Pixar CFO Mather

The Securities and Exchange Commission has dropped a stock option backdating probe against Ann Mather, the former chief financial officer of Pixar Animation Studios and a current Google Inc. (GOOG) board member.

The SEC last week sent Mather a letter saying it was no longer pursuing the matter, a spokesman for Mather said on Friday.

In April 2008, Mather received a Wells Notice stating that SEC staff intended to recommend the agency take civil action against Mather in conjunction with the improper dating of stock-option grants at the filmmaker when it was still an independent company. Pixar now is owned by Walt Disney Co. (DIS).

Mather's spokesman said individuals who receive a Wells Notice are given the opportunity to make their arguments as to why the agency should not file charges. The matter went no further, the spokesman said.

An SEC spokesman declined to comment on the matter. An enforcement official in the SEC's Los Angeles office couldn't be immediately reached for comment.

Mather, who had denied the allegations, was among executives at more than 140 companies caught up in backdating scandals in recent years.

Backdating involves retroactively setting the value of a stock option grant at a low price in order to increase the value of the grant. The practice, which can understate a company's expenses and exaggerate profits, could lead to civil or criminal charges if not properly disclosed to shareholders.

Disney said in November 2006 that the SEC was looking into Pixar's options-granting practices. The studio closed its own inquiry a few months later, concluding that backdating had occurred prior to its acquisition of the company and that no one currently associated with Disney had engaged in intentional misconduct.

Those findings also appeared to exonerate Steve Jobs, the former chief executive officer of Pixar and current CEO of Apple Inc. (AAPL).

The Wall Street Journal reported last year that Pixar's options-granting practices were in place before Mather joined the company in 1999 and that the company's board, auditors and outside legal counselors were aware of the practices.

-By Scott Morrison, Dow Jones Newswires; 415-765-6118; [e-mail]

(Sarah Lynch contributed to this story)