Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:
Head of Cyberonics Resigns as Options Inquiry Expands [New York Times]
Summary: The news of Cyberonics' CEO Robert P. Cummins' Friday resignation sent the company's shares up yesterday to a high of $26.45 before closing at $24.17, up 12%. Mr. Cummins had been under SEC investigation for a questionable stock-options grant that occurred within hours of FDA approval of the company's signature depression implant in 2004. CFO Pamela Westbrook also left. Cyberonics' accounting practices have also been scrutinized and it has not been able to get insurance coverage for its implant product. Problematic transactions totaling $10 million will require Cyberonics to restate earnings going back to 2000. Analysts are confident that Cummins' departure allow for the company to be more readily acquired. Acquisition rumors heated up after Carl Icahn purchased a 2.4% stake in the company two weeks ago. Cummins' severance includes $1.72 million for resigning in addition to 75,000 shares and accelerated vesting of options and other stock grants.
Related links: Media coverage: Red Herring, MarketWatch . Commentary: Cyberonics Faces Increasing Shareholder Pressure • WSJ Options Scandal Scorecard.
Potentially impacted stocks and ETFs: Cyberonics (NASDAQ:CYBX). Competitors: Shire plc (SHPGY), Taro Pharmaceutical Industries Ltd. (NYSE:TARO) • ETFs: iShares Dow Jones U.S. Healthcare Index (NYSEARCA:IYH)
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