His grant of 1.2m premium priced stock options each have a ten-year term and will have
exercise prices as follows: 400,000 stock options will have an
exercise price per share of 1.75 times the fair market value of Logitech shares on the grant date; 400,000 stock options will have an
exercise price per share of 2 times the fair market value of Logitech shares on the grant date; and 400,000 stock options will have an
exercise price per share of 2.5 times the fair market value of Logitech's shares on the grant date.
The company will reduce the
exercise prices of a total of 22,326,069 of currently outstanding warrants from current
exercise prices, ranging from CAD0.55 to CAD1.89 per share to CAD0.0 per share.
The special committee reviewed stock option grants issued between 1985 and 2006 and found incidences of misdated option grants, the issuance of options after their expiration dates, and errors in the determination of
exercise prices for automatic option grants to Board members.
(32) The plan must not give the administrative committee the power to reduce the
exercise price under any circumstances, except for the usual pro-rata adjustments of option amounts and
exercise prices in the case of recapitalizatious or mergers.
A better approach would be to structure the option award with
exercise prices set over a period of time, thus achieving a weighted average more reflective of a true baseline price.
Because the merger of FNIS and FNF will require the exchange of outstanding stock options between entities under common control, the combined companies will be required to record a compensation expense equal to the difference between the aggregate
exercise prices and intrinsic value of vested FNIS stock options on the date the merger closes.
These existing stock options have
exercise prices significantly higher than recent stock prices.
Third, the optimal
exercise price of American options is determined by the optimal
exercise prices of European options with different maturities if there were only a discrete number of dates when options could be exercised.
If the
exercise price of each ISO granted under an employer's plan is equal to the fair market value of the underlying shares of stock at the time of grant (a common situation, although ISOs with
exercise prices in excess of current fair market value are obviously permissible), then compliance can be tested by comparing $100,000 to the product of (i) the number of shares with respect to which ISOs of an employee first become exercisable in a particular year and (i) the
exercise price per share.
However, most of these companies have at-the-money option programs with constant
exercise prices.
* The statement adds the following items that must be disclosed: the range of
exercise prices for outstanding options at the balance sheet date, the weighted-average expected lives used to estimate value for stock options and separate disclosures by ranges of
exercise prices if the range is wide.