Another day, another option exchange program…
Lately, it seems like hardly a day goes by when some other company isn’t rolling out an option exchange program. The filings are virtually identical with stories of woefully overpriced options damaging employee morale. Footnoted regulars may remember that Google (GOOG) seemed to kick things off earlier this year with its option exchange program. But since then, we’ve counted dozens of others.
Today’s entry is from Cardinal Health (CAH), which has been something of a frequent flyer on footnoted. In this filing from earlier today, they talk about giving employees the right to exchange options that are priced higher than $56.45 a share. The filing includes a wide range of additional material from FAQs to screenshots of the back end, now doubt to help people like this truck driver understand the benefits of trading in their boatloads of options for new, lower priced ones.
A quick scan of Edgar shows that the pace of companies offering stock option exchange programs seems to be accelerating. We counted over 80 filings that mentioned stock option exchange programs in June 2009, compared to just 11 filings in 2008. Granted, many of those are multiple filings for the same company. Still, it’s hard to ignore the fact that option exchange programs seem to have really taken off lately.
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Posted in Tags: frequent flyers, stock options |
 1 Comment » |
June 20th, 2009 at 3:30 pm
Michelle, I’m glad to see you shedding some light on the option exchange programs.
NVIDIA did something similar. They purchased underwater stock options from employees for cash. The purchase resulted in a $140 million charge in the April 2009 quarter.
Note 3 to the financial statements in the most recent 10-Q explains the purchase and charge in some detail. Employees that tendered their options received $3.00 cash for each option having an exercise price between $17.50 and $28.00 per share. Options having an exercise price over $28 were redeemable for $2.00 in cash.