The welcome wagon at AP Pharma rolled out a huge option award
Monday to its new chief executive, Ronald Prentki. How big was it?
So big that it ate up just over one-third of all the shares reserved in
the company's employee stock plans at the end of last year. It was
nearly 15 times the number of shares doled out to all employees during 2007.
The option also had an exercise price of $1.19 a share, which was 67
percent lower than the average exercise price of all the options AP
Pharma granted last year and 86 percent lower than the average exercise
price of all options outstanding as of Dec. 31 - below even the $1.30
that was the lowest-priced option in existence at the end of last year.
Shares of AP Pharma, which develops drugs using its own
controlled-release delivery technology, have fallen 25 percent so far
this year, hitting an all-time low of 81 cents in mid-April. They
closed Friday at $1.15.
There is potential for major movement in the stock depending on the
results of a pivotal clinical trial of its lead product candidate, a
drug designed to prevent chemotherapy-induced nausea and vomiting in
cancer patients. The company expects to announce trial results this
quarter and to file a new drug application with the Food and Drug
Administration in the fourth quarter, according to the company's annual
financial filing with the Securities and Exchange Commission.
The option grant doesn't begin to ves
for a year. In the meantime,
Prentki will have to make do with his $425,000 annual salary and bonus
targeted at half that amount.
Looking smart: LookSmart's board discovered last month that its shareholders are a tough house to play to, as they say in the theater.
Back in November, the board of the San Francisco supplier of online
advertising software enacted a shareholder rights plan, more commonly
called a "poison pill," designed to be swallowed in the event of a
hostile takeover bid.
The board made a concerted effort to make the plan "shareholder
friendly" by incorporating certain features to address poison-pill
critics who say such plans discourage takeover offers and don't
maximize shareholder value.
Such plans are usually triggered when a single shareholder acquires 15
percent of a company's stock, but the board raised that to 20 percent.
It also had the plan expire after three years instead of the more
typical 10; it excluded any so-called "dead hand" provisions that would
have prevented future boards from rescinding the pill.
Finally, the board put the plan up for a vote, something it was not required to do.
It even picked a mellow venue for its annual stockholders meeting,
which was held last month at the Meadowood lodge in St. Helena, a
"center of social, cultural and viticultural life in Napa Valley."
Despite all this, shareholders voted no on the poison pill, and LookSmart's board repealed the plan this week.
As if to show there were no hard feelings, the board voluntarily took
another step considered key to good governance: It named its lead
independent director to be its new chairman, separating that role from
the company's current CEO.