Earlier this week, The Corporate
Library released “Starbucks’ Options Mega-Grant – Paying A CEO Millions
Simply For A Market Rebound?” which served as an example of the type
of analysis conducted for The Corporate Library's more expansive survey
on the topic of large stock option grants. Picking up on our previous
mega-grant research, we released this morning, “The Corporate Library's 2010 Mega-Grants Survey.”
Despite the fact that CEOs have been
granted much more time-based restricted stock in recent years than ever
before (serving as more of a sure thing compared to stock options which
can lose all value when the stock price slips below exercise prices),
there has also been an increase in the number of mega-grants being
issued by compensation committees. Moreover, a decline in company stock
prices at companies affected by the financial crisis led to some mammoth
option grants in 2009. In some cases, CEO’s simply got more stock
options to reach a desired grant date value when the company stock price
declined. If a CEO makes millions on a market rebound, does this really
align his interests with those of shareholders? We think not.
In addition to details on the top 10 highest stock option grants of 2009 at
companies Sirius XM, MoneyGram, Oracle, Tenet Healthcare, Ford, Standard
Pacific, Nabors, Move Inc, Sprint Nextel, and Starbucks, this report
also offers clear solutions as to what can be done to avoid mega-grants
that do little to incentive the CEO. There are a number of options
available to compensation committees who truly set out to align
management and shareholder interests.
The Corporate Library's 2010 Mega-Grants Survey is
available for purchase in our online store.
Greg Ruel - Advisory Services Manager