Diamond
Management & Technology Consultants Inc. said Tuesday that the
Chicago consulting concern completed an earlier-announced tender offer
that is part of a shift in the company's compensation program.



More than a month ago, Diamond said it is shifting its compensation
plan away from its former reliance on equity grants in favor of cash
payments to employees. As part of that initiative, the company launched
in February a tender offer that gave workers the chance to exchange for
common stock "restricted stock units" Diamon had previously granted the
employees.



The offer expired at 12:01 a.m. Tuesday, and Diamond said this morning
that a total of 2,157,476 RSU's had been tendered in exchange for
1,726,512 common shares.



After withholding about half a million shares to pay the taxes employee
incurred in the swap, Diamond said, the company will issue about 1.2
million new shares, boosting the management and technology
consultancy's total shares outstanding to 27 million.

The exchange, combined with planned cuts in future equity awards, will
help lower Diamon'd's stock-based compensation expense, from about $15
million in the fiscal year ending March 31 to about $6 million in
fiscal 2010.



But it comes at a price: the tender offer will generate a one-time,
non-cash charge of about $16.7 million, or 39 cents on an after-tax
basis, in the fourth quarter. Given that analysts expect per-share
earnings of just 3 cents for fiscal 2009 and 6 cents in fiscal 2010,
the charge promises to erase more than two years' worth of earnings at
the company.

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