Marvell Technologies Completes Independent Review of Stock Option Practices

Marvell Completes Independent Review of Stock Option Practices

Marvell Technologies Group Ltd. (Nasdaq: MRVL) today announced that the special committee appointed by its Board of Directors (the “Special Committee”) has completed its internal review relating to the Company’s historical stock option practices and related accounting matters.

As previously announced, the Board of Directors concluded on October 2, 2006 that the actual measurement dates for financial accounting purposes of numerous stock option grants issued in the past differ from the recorded grant dates of such awards. The Special Committee has determined that there were numerous instances in which grant dates were chosen with the benefit of hindsight as to the price of the Company’s stock, so as to provide exercise prices lower than the fair market value on the actual measurement date. In addition, the Special Committee found a systemic failure of internal controls with respect to the stock option process and related matters, as well as a failure by certain members of current and former management to exercise sufficient oversight over the stock option process, resulting in inaccuracies in the Company’s books and records, financial statements, and public filings. The Special Committee reported that several current and former members of management, including the previously terminated General Counsel of its U.S. operating subsidiary and the recently resigned Chief Financial Officer and Chief Operating Officer, bear varying degrees of responsibility for these deficiencies.

The Special Committee found that the Company’s Chief Executive Officer participated in only a few instances in grants with incorrect measurement dates. The Special Committee recommended that Dr. Sehat Sutardja remain as Chief Executive Officer and as a member of the Board of Directors, but step down as Chairman of the Board in favor of a non-executive Chairman of the Board. The board’s Governance Committee is commencing a search for three new independent directors to fill existing vacancies. One of these independent directors will succeed Dr. Sutardja as Chairman of the Board. Dr.Sutardja, upon such event, will remain a director and continue as the Company’s President and Chief Executive Officer.

The Company also announced that Weili Dai, Marvell’s co-founder, Executive Vice President and Chief Operating Officer and member of the Board of Directors, will no longer serve as Executive Vice President, Chief Operating Officer and director, but will continue with the Company in a significantly reduced role as the Director of Strategic Marketing and Business Development, a non-management position. In addition, the Company announced that Matthew Gloss, the former General Counsel of its U.S. operating subsidiary, previously had been terminated. The Company also announced that it had accepted the resignation of George Hervey, the Company’s Chief Financial Officer. The Company has appointed Mike Tate, its Corporate Controller and Treasurer, to serve as interim Chief Financial Officer.

In late December, Dr. Sutardja, Ms. Dai and Mr. Hervey each voluntarily agreed with the Company to reform the outstanding stock option agreements for grants previously awarded to them which were determined to have measurement dates different from the recorded grant dates and the fair market values on those measurement dates were higher than those on the corresponding recorded grant dates. Pursuant to those agreements, the parties corrected the exercise price for each affected grant still outstanding to that which would have been applicable had the grant been made using the actual measurement date for accounting purposes. To the extent that such an option already had been exercised, each executive remitted to the Company the full amount of the difference between the exercise prices of the options as granted and the fair market values of the underlying Common Stock on the actual measurement dates.