Saturday, October 01, 2005

Taser defends giving stock options to police

Taser defends giving stock options to police

Robert Anglen
The Arizona Republic
Sept. 24, 2005 12:00 AM
Taser International gave potentially lucrative stock options to six police officers from 2001 to 2003, most of whom promoted Taser's stun guns and, in some cases, urged their cities to buy them.

Court documents released this week show that officers in Arizona, California, Washington, Texas, and Canada received thousands of company stock options, some only weeks after urging police commanders or city officials to purchase Tasers.

Four of the six officers are now employed by Scottsdale-based Taser International, which is facing state and federal inquiries over the safety of its stun gun and the weapon's involvement in deaths across the country.

The stock options, as well as payments to other officers for Taser training, have sparked concerns about potential conflicts of interest. Critics say Taser paid officers to influence cities to get them to purchase the stun guns.

"We've raised concerns about Taser's options-granting practices since this past January," stock analyst John Gavin of SEC Insight wrote in a report to investors this week.

Other critics, including the American Civil Liberties Union, say payments to police officers have created a conflict of interest, with officers promoting the stun gun and repeating Taser's assurances of safety while minimizing risks.

Taser officials issued a news release Thursday defending the police officers and denying any conflict.

"The officers on our (training) board were involved in training operations at their respective departments - not the purchasing departments," Taser Chief Executive Officer Rick Smith said in the news release. "They followed all relevant conflict-of-interest regulations at their departments, and the grant of stock options did not violate Taser's code of ethics nor industry norms."

The information concerning the stock options was released this week after Taser lost a legal challenge to seal documents from a lawsuit against Taser filed in Maricopa County Superior Court.

Taser asked the court to keep confidential the deposition of company President Tom Smith, arguing that his answers about who received stock options was proprietary. The Arizona Republic and SEC Insight both filed motions to keep the records open, arguing that information about Taser is vital to the public's interest.

The court agreed, and Taser did not appeal.

According to Republic research, medical examiners in 18 cases have said Tasers were a cause, a contributing factor or could not be ruled out in someone's death.

The newly released documents for the first time reveal who outside the company received stock options.

The six active-duty officers who received options were from police departments in Chandler and Glendale, Seattle, Sacramento, Austin and Victoria, British Columbia. Records show all but the Austin officer promoted the effectiveness of the weapons and some urged their cities to purchase them.

Five other individuals also were issued stock options: a retired New York police officer; a former United Airlines employee; Taser's current medical director; a lawyer who did patent work for Taser, and his assistant. New York, Austin and United Airlines purchased Tasers, but it's unclear if the employees played a role in the decision.

The options could be worth hundreds of thousands of dollars, depending on when they were exercised and sold.

The 11 individuals received a total of 27,671 options. It is not known when each person exercised and sold his options.

In its news release, Taser defends giving options to officers. Rick Smith says the officers were not being rewarded but being compensated for serving on Taser's Master Instructor Training Board, which advises Taser on law enforcement training programs.

"It should be noted that none of the board members were in a position to approve product purchases," Smith said. "Every one of their agencies had already purchased and deployed Taser devices prior to their joining our advisory training board."

Public records show that one of the officers, former Chandler police Officer Jim Halsted, received 500 stock options a year before he urged the City Council to spend $193,000 on Tasers. Halsted, now a regional sales manager for Taser, was later investigated by the city for conflict-of-interest violations and cleared of any wrongdoing.

On March 27, 2003, Halsted made a presentation to the Chandler City Council in which he stressed the importance of buying Tasers and encouraged officials to act that night. Contacted at his office Friday, Halsted declined to comment.

Former Seattle police Officer Steve Ward, who now works for Taser, was issued stock options on Jan. 1, 2001, almost a year before Taser created its training board. In September 2000, Ward co-authored a report that advocated arming officers with Tasers.

Another officer who received Taser stock options is Darren Laur of the Victoria, British Columbia, Police Department. Laur has been a staunch advocate for Taser for years and helped write a report in 1999 that helped usher Tasers into Canada.

According to court documents, Laur was given 750 stock options in 2001 for helping to design a holster for the Taser. Taser said he sold the options in 2003.

"In my view there is an appearance of a conflict of interest, or at least the perception of a conflict," Canadian lawyer Cameron Ward said. Ward represents the family of Robert Bagnell, who died in June 2004 after officers shocked him with a Taser.

In his deposition, Taser President Tom Smith said he did not believe any of the options granted to police officers represented a conflict.

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