By Gina Keating

"This investigation has been completed as to Ann Mather, against whom we do not intend to recommend any enforcement action by the Commission," said the letter from the Los Angeles office of the Securities and Exchange Commission.

The August 10 letter to Mather's attorney Timothy Coleman was obtained by Reuters from a person involved in the matter but not authorized to provide the correspondence.

Mather's spokesman, Paul Kranhold, confirmed that Mather had received the SEC letter but had no other comment. An SEC spokesman in Washington D.C. declined to comment.

The reprieve comes 16 months after Mather, a Google Inc board member, received a Wells notice from the SEC. A Wells notice indicates SEC staff intends to recommend that civil charges be brought, but gives the recipient a chance to mount a defense.

Mather's attorney had denied at the time that she engaged in any wrongdoing.

Options backdating, a practice in which option grant dates are changed retroactively to allow recipients to reap greater profit, is not illegal as long as it is properly disclosed and accounted for in financial statements.

Pixar was among more than 200 companies that disclosed internal audits or government probes surrounding options practices.

Mather was the only Pixar executive who became a government litigation target. A source familiar with the case said last year that Mather was expected to argue that Pixar's board, outside lawyers and auditors approved backdating long before she was hired.

"She responded to the Wells notice and there was, over the last year, quite a bit of communication with Commission staff about her defense," a second source familiar with the case said.

Pixar was bought in 2006 by the Walt Disney Co , whose own audit found options backdating as early as 1997 but cleared then-Chief Executive Steve Jobs and anyone associated with the company of deliberate misconduct, a regulatory filing showed. Jobs became Disney's largest individual shareholder and a board member in the Pixar acquisition.

But Disney had to pay about $34 million to former Pixar employees with backdated options to cover price discrepancies and taxes. Backdating also was found at the company Jobs co-founded, Apple Inc .

In addition to her Google directorship, Mather also serves on the boards of Glu Mobile Inc , Central European Media Enterprises Group, Zappos.com, and Ariat International Inc.

(Reporting by Gina Keating; Editing by Tim Dobbyn)