BETHPAGE, New York: Cablevision Systems has found itself further in the legal mire as an investigation revealed the company had awarded stock options to a deceased vice chairman.

A filing with financial regulator, the Securities and Exchange Commission, shows the US's fifth-largest cable provider, controlled by the Dolan family, awarded the options after the death of Marc Lustgarten in 1999, but backdated them so it would appear they were made while he was still alive.

John Coffee, law professor at Columbia University, says options are intended to create an incentive for execs to boost their company's stock price.

He noted dryly: "Trying to incentivize a corpse suggests they were not complying with the spirit of shareholder-approved stock-option plans."

The probe, by an outside law firm, has also uncovered that Cablevision had awarded stock options to a consultant but accounted for them as if he were an employee.

Two directors on the board's audit and compensation committees have stepped down as the company also revealed it had been summoned to appear before a grand jury.

The executives sent letters to Cablevision last week stating they were making the moves "in light of the public attention" over the options probe and the "numerous shareholder lawsuits" that name them, among others, as defendants. Both remain directors.

Cablevision is one of some hundred businesses under federal investigation for possibly manipulating stock-option grants to secretly boost their value.

Data sourced from Wall Street Journal Online; additional content by WARC staff