Broadcom Corp. co-founder Henry Samueli said Tuesday that his semiconductor company awarded thousands of stock option grants to employees in the years after the company's initial public offering, but he didn't think there was anything illegal or improper in the way it was done.

Samueli, 55, testified as a defense witness in the federal fraud trial of Broadcom's former chief financial officer, William Ruehle, who is accused of illegally backdating stock options. Ruehle has pleaded not guilty to 14 counts of fraud and conspiracy.

Backdating occurs when a company retroactively sets the options' exercise price to a low point in the stock's value to increase the recipient's profits when the shares are sold. The practice is not illegal if accounted for correctly, but if backdating isn't properly disclosed, it can allow companies to overstate their profits and underpay taxes while diminishing shareholder value.

Federal prosecutors allege that Samueli, Ruehle and Broadcom co-founder Henry T. Nicholas III backdated stock options to benefit employees, keeping information about millions of dollars in compensation from shareholders. Nicholas is scheduled for trial early next year.

Irvine, Calif.-based Broadcom hasn't admitted wrongdoing, but the computer chipmaker reduced previous financial results by $2.2 billion in 2007 and agreed to pay $12 million to settle a civil complaint over the issue.

Samueli, the billionaire owner of the NHL's Anaheim Ducks, pleaded guilty last year to lying to the Securities and Exchange Commission during its investigation and is awaiting sentencing. The judge overseeing Ruehle's trial took the unusual step of granting Samueli immunity for his testimony Tuesday.

Samueli testified that after Broadcom went public in 1998, the company grew from 150 to 3,000 employees in just two years. Broadcom also acquired 22 companies after its IPO.

He told jurors that Broadcom paid lower salaries than its competitors but offered potentially lucrative stock options to all its employees to compensate. This strategy meant Broadcom employees were more vested in Broadcom's success than if they received cash bonuses, he said.

Samueli said that because so many new hires were joining the company, Broadcom leadership began issuing stock option grants for groups of new employees every few weeks to minimize the paperwork. Samueli said he and others would watch the stock price and try to issue the options on a date when the price was low so it would be more favorable.