E-mail this page2007 — Public Service
Awarding at a Low
July 15, 2006
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Awarding at a Low As stocks sank after the 9/11 attacks, scores of companies rushed to issue options to top officials. For recipients of options, the lower their company's stock price when options are awarded the better, since the options grant a right to buy shares at that price for years to come. The grants set recipients up for millions of dollars in profit if the shares recovered. Here is a look at grants made in September 2001. Examples of options granted (stock prices adjusted for splits)  Date of grant
Home Depot Number of top-level executives receiving grants: 5 Total estimated Black-Scholes value at time of grants: $19.2 million Difference between Sept. 10 close and the options' exercise price: Down 10.7 % as of 9/17; Down 9.5% as of 9/18 Company comment: Said board approved "special equity award" on Sept. 17 and Sept. 18 to retain key executives. 
Sources: FactSet Research Systems, WSJ Market Data Group; Standard & Poor's ExecuComp; the companies; WSJ research J. Jill Group Number of top-level executives receiving grants: 5 Total estimated Black-Scholes value at time of grants: $2.5 million Difference between Sept. 10 close and the options' exercise price: Down 34.2% Company comment: Former director said he can't recall any effort to time award to low stock price. Talbots, which acquired J. Jill, said it can't comment because events happened before acquisition. 
Merrill Lynch Number of top-level executives receiving grants: 1 Total estimated Black-Scholes value at time of grants: $14.4 million Difference between Sept. 10 close and the options' exercise price: Down 15% Company comment: Said grant to Stanley O'Neal was directly tied to his July promotion to president, not related to 9/11. Ex-head of committee said firm would never try to time grants to occur after a national tragedy. 
PeopleSoft Number of top-level executives receiving grants: 2 Total estimated Black-Scholes value at time of grants: $2.0 million Difference between Sept. 10 close and the options' exercise price: Down 38.4% Company comment: Cyril Yansouni, a former director, said he had "absolutely no recollection" of 2001 grants but said company didn't try to time options grants to hit market lows. 
Sandisk Number of top-level executives receiving grants: 2 Total estimated Black-Scholes value at time of grants: $2.1 million Difference between Sept. 10 close and the options' exercise price: Down 30.9% Company comment: Declined to comment 
Teradyne Number of top-level executives receiving grants: 7 Total estimated Black-Scholes value at time of grants: $14.3 million Difference between Sept. 10 close and the options' exercise price: Down 24.2% Company comment: Said grants were triggered by retrenchment plan that began before 9/11 attack and were unrelated to the attack. 
T. Rowe Price Number of top-level executives receiving grants: 2 Total estimated Black-Scholes value at time of grants: $1.5 million Difference between Sept. 10 close and the options' exercise price: Down 26.7% Company comment: Chairman George Roche said grants "had nothing to do with 9/11" and "you didn't know that there wasn't going to be a second round of attacks." 
UnitedHealth Number of top-level executives receiving grants: 1 Total estimated Black-Scholes value at time of grants: $ 675,000 Difference between Sept. 10 close and the options' exercise price: Down 9.7% Company comment: Declined to comment, citing ongoing review of options program by a special committee of the board. 
Weatherford Number of top-level executives receiving grants: 5 Total estimated Black-Scholes value at time of grants: $13.8 million Difference between Sept. 10 close and the options' exercise price: Down 29.7% Company comment: Said meeting that gave options was prescheduled for Sept. 12 and postponed. Said there was no attempt to time options to low price. 
Werner Enterprises Number of top-level executives receiving grants: 5 Total estimated Black-Scholes value at time of grants: $8.5 million Difference between Sept. 10 close and the options' exercise price: Down 26% Company comment: Chief Financial Officer John J. Steele said the Sept. 28 grant did not mark a yearly low, and said "no one knew what direction the market was going to move in the future." 
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© 2006, The Wall Street Journal
