Marvell offering restricted stock in exchange for underwater options - 18 Dec 2008

Marvell offering restricted stock in exchange for underwater options

http://blogs.mercurynews.com/docudrama/2008/12/17/marvell-offering-restricted-stock-in-exchange-for-underwater-options/

Posted by Jack Davis on December 17th, 2008 at 5:43 pm | Categorized as Marvell Technology, Options | Tagged as Marvell Technology, Option exchange, Restricted stock, Stock options

Marvell Technology has offered to exchange options
held by its employees with an exercise price of $12 or higher for a
pro-rated number of shares of restricted stock. The exchange period,
which began Tuesday, ends Jan. 23.

The exchange rate for options priced from $12 to $18 will be one restricted stock unit for every 6.55
exchanged options; from $18.01 to $25, one restricted stock unit for
every 8.4 exchanged options; and for options priced above $25, one
restricted stock unit for every 13.2 exchanged options.

The company said it is making the offer “to restore the retention
and incentive benefits of our equity awards” since many of the current
options held by them “have exercise prices that are significantly
higher than the current market price for our stock… commonly referred
to as being ‘underwater.’ By making this offer, we intend to provide
eligible employees with the opportunity to receive restricted stock
units that have a greater retention value because such restricted stock
units are more likely to provide a return than the underwater options.”

And no, the company’s named officers and the directors serving on its board may not participate.

Last May, Marvell reached an agreement with the SEC
over its investigation into its “historic stock option granting
practices” — a euphemism for stock option price picking — that included
the payment of a $10 million civil penalty.