Cognex makes tender offer for underwater options

© 2009 The Associated Press

http://www.chron.com/disp/story.mpl/ap/business/6723750.html

Nov. 16, 2009, 4:59PM

NATICK, Mass. —
Cognex Corp., which makes mechanical vision sensors, on Monday
announced a cash tender offer for some underwater stock options held by
certain employees, officers and directors.

The
company, based in Natick, Mass., could pay up to $9.6 million and incur
a charge of $900,000 if all options are tendered and accepted. Stock
options that are under water have no value to the holder because the
exercise, or strike, price is higher than the current market value of
the underlying stock.

CEO Robert Shillman said the company
was making the offer to make up for the drop in the value of the
options due to the ailing economy. He said the company's compensation
is tilted toward options since it pays less salary and bonuses than
competitors.

The options must have an exercise price of $23
or higher, which is 29 percent higher than the 52-week high before the
start of the offer.

Cognex said there were about 5.3 million
options eligible for the tender offer. If all those shares are
tendered, the number of outstanding options would fall by 54 percent.

The offer is scheduled to expire Dec. 15.

Cognex
shares fell 5 cents to $17.93 in after-hours trading Monday after
closing at $17.98, up nearly 6 percent from a day earlier.