Taser Offers Police Officers Stock Options

BETH DeFALCO
Associated Press

PHOENIX (AP) -- Stun-gun maker Taser International Inc. came under increased scrutiny Wednesday from analysts after the company president told a newspaper that four active-duty police officers were offered stock options for law enforcement training programs they supervised.

While Taser President Tom Smith would not identify the officers, citing privacy concerns, the Scottsdale-based company admitted in Securities and Exchange Commission filings that the training programs ``have led directly to the sale of Tasers to a number of police departments.''

"Once you have those stock options, it's human nature, you want them to do well,'' said Marianne Jennings, a lawyer who teaches business ethics at Arizona State University. "It becomes an issue of public trust, and that's what police officers are supposed to have.''

The filings show that a total of five active-duty officers actually serve on Taser's eight-member training board, which was created in 2002.

"They are not involved in the purchasing decisions (of their police departments) to my knowledge,'' Smith told USA Today, although he would not say how many options they received.

Smith did not return calls Wednesday from The Associated Press.

The stock-option disclosure is one of several potential conflicts that have stung the company.

As Taser's stock price climbed last year, the human rights group Amnesty International and various news organizations published reports raising questions about the safety of Taser's stun guns.

Then in a Jan. 7 letter to stockholders, Taser announced that the SEC was investigating safety claims made by the stun-gun maker.

The SEC is also reviewing a $1.5 million, Dec. 31 sale by Taser to a firearms distributor that some analysts have questioned because it appears to inflate sales to meet annual projections.

A review by The Associated Press of company filings with the government also shows that last year Taser paid to lease airplanes owned by Smith and other family members that have run the business.

On Wednesday, Taser spokesman Steve Tuttle declined to answer questions about the stock options for active-duty police, instead issuing a statement that referred questions to the SEC filings. However, the filings never directly mention that some of the officers that oversee the company's police training program are eligible for the options.

Analyst John Gavin, author of the SEC Insight newsletter, said the ambiguous information in the filings has become a concerning trend for the company.

"They granted 2.2 million stock options between 2002 and 2003, and we as analysts can't account for 80 percent of them ... in a way that is either useful or that makes sense to investors,'' Gavin said. "It's our opinion that Taser went out of their way to keep investors from being able to make sense of this data.''

"This is not the kind of transparency that is comforting to investors,'' he added.

However, things were looking up for the company by Wednesday.

A medical examiner's report ruled the death of a Flagstaff, Ariz., man shocked with a Taser stun in July may have been triggered by his heavy cocaine use.

Also, a non-criminal grand jury in Florida supported the use of the stun guns in a report focusing on the handling of mentally ill people in the criminal justice system.

Taser shares rebounded nearly 21 percent Wednesday, gaining $2.91 to close at $17.01 on the Nasdaq Stock Market after falling nearly 30 percent the previous session.