Options or restricted stock for CEO? Macrovision changes its mind — again - Jack Davis, Mercury News - 8/4/2008

DW - By the way, this journalist, Jack Davis, has a great blog about the silicon valley  - http://blogs.mercurynews.com/docudrama

Options or restricted stock for CEO? Macrovision changes its mind — again

 
POSTED BY JACK DAVIS ON AUGUST 4TH, 2008 AT 2:22 PM | CATEGORIZED AS EXECUTIVE PAY, GOVERNANCE, MACROVISION | TAGGED AS EXECUTIVE COMPENSATION, GOVERNANCE, MACROVISION, RESTRICTED STOCK, STOCK OPTIONS

When Alfred Amoroso was named chief executive of Macrovision in June 2005, he was given an option to buy 500,000 shares and was guaranteed future option awards good for 125,000 shares each that were to be granted twice a year in each of 2006, 2007 and 2008.

A year later, however, Amoroso and/or Macrovision’s compensation committee evidently had second thoughts. His employment agreement was amended so that the next installment of his stock option award that was to be granted Sept. 1 would be changed to restricted stock instead, as would be each of the subsequent awards to be made pursuant to his hiring agreement.

Unlike options, restricted shares retain value even if the stock drops after the award is granted. As a result, companies use fewer restricted shares in equity awards than they do options, so the equal exchange of Amoroso’s option awards for the same number of restricted shares was rather unusual.

Amoroso’s 2005 agreement was altered yet again last month when, according to a filing the company made with the Securities and Exchange Commission Friday, the compensation committee decided that Amoroso’s last installment of 125,000 shares of restricted stock would instead be paid out as a combination of restricted stock and stock options.

Rather than split the award into components that resulted in 125,000 shares, however, the amended award now calls for 85,000 shares of restricted stock and 80,000 option shares. Conveniently for Amoroso, Macrovision options are evidently now considered to be less valuable than restricted stock, requiring more of them to be given out in exchange.

Last September, Macrovision shares began the month above $24. They are currently trading around $15, up from a 5-year low of $13 they hit in May but still down from their roughly $21 average price during that time. A good time to have an option priced, in other words.