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It's Raining Stock Options in Lindon
Thursday, January 26 2006 @ 01:20 AM EST

It's raining stock options on that happy band in Lindon. On January 23, SCO granted executives Darl McBride, Chris Sontag, Ryan Tibbits, Sandy Gupta, Tim Negris, Jeff Hunsaker, and Bert Young a combined total of 400,000 stock options at $3.78.

Gupta got as many as Darl, 80,000, but he has to wait a year for them to be exercisable, as do all the rest, except for McBride. His options appear to be immediately exercisable. Oh, they all fully vest immediately "upon the occurrence of certain specified events."

[ UPDATE: SCO has filed an amended form 4/A, which lists January 23, 2007, not 2006 as the date his shares are exercisable.]

Here's the list:

MCBRIDE DARL C
Number of derivative securities: 80000
Date exercisable: 2006-01-23 (Note Update above, that the date has been amended to 2007.)
Expiration date: 2016-01-23
Price per share: 3.78
Remarks: Grant to reporting person of non-qualified stock options to buy shares of Common Stock under the Company's 2004 Omnibus Stock Incentive Plan. The option vests over a four-year period commencing from the option date or fully vests upon the occurrence of certain specified events.

YOUNG BERT B
Number of derivative securities:70000
Price per share: 3.78
Date exercisable:2007-01-23
Expiration date:2016-01-23
Remarks: Grant to reporting person of non-qualified stock options to buy shares of Common Stock under the Company's 2004 Omnibus Stock Incentive Plan. The option vests over a four-year period commencing from the option date or fully vests upon the occurrence of certain specified events.

HUNSAKER JEFF F
Number of derivative securities: 40000
Price per share: 3.78
Date exercisable:2007-01-23
Expiration date:2016-01-23
Remarks: Grant to reporting person of non-qualified stock options to buy shares of Common Stock under the Company's 2004 Omnibus Stock Incentive Plan. The option vests over a four-year period commencing from the option date or fully vests upon the occurrence of certain specified events.

Gupta Sandy
Price per share: 3.78
Number of derivative securities: 80000
Date exercisable: 2007-01-23
Expiration date:2016-01-23
Remarks: Grant to reporting person of non-qualified stock options to buy shares of Common Stock under the Company's 2004 Omnibus Stock Incentive Plan. The option vests over a four-year period commencing from the option date or fully vests upon the occurrence of certain specified events.

TIBBITTS RYAN E
Number of derivative securities: 50000
Price per share: 3.78
Date exercisable:2007-01-23
Expiration date:2016-01-23
Remarks: Grant to reporting person of non-qualified stock options to buy shares of Common Stock under the Company's 2004 Omnibus Stock Incentive Plan. The option vests over a four-year period commencing from the option date or fully vests upon the occurrence of certain specified events.

SONTAG CHRISTOPHER
Number of derivative securities: 50000
Price per share: 3.78
Date exercisable:2007-01-23
Expiration date: 2016-01-23
Remarks: Grant to reporting person of non-qualified stock options to buy shars of Common Stock under the Company's 2004 Omnibus Stock Incentive Plan. The option vests over a four-year period commencing from the option date or fully vests upon the occurrence of certain specified events.

Negris Timothy Paul
Number of derivative securities: 30000
Price per share: 3.78
Date exercisable: 2007-01-23
Expiration date: 2016-01-23
Remarks: Grant to reporting person of non-qualified options to buy shares of Common Stock under the Company's 2004 Omnibus Stock Incentive Plan. The option vests over a four-year period commencing from the option date or fully vests upon the occurrence of certain specified events.

The SEC filings don't specify what the "certain specified events" are, but you'll recall that on July 13, 2005, as SCO told us in an 8K that month, the Compensation Committee of the board of directors of The SCO Group, Inc. adopted a revised Form Notice of Grant of Stock Options for The SCO Group, Inc. 2004 Omnibus Stock Incentive Plan. So I'm thinking this might be the events list:

6. Special Termination of Option.

(a) In the event of a Corporate Transaction, any options that the Optionee holds that are exercisable will remain exercisable until their expiration, and any options that the Optionee holds that are not exercisable will expire on the date of the Corporate Transaction, unless otherwise provided in an agreement between the Corporation and the Optionee, or the Committee, on a case-by-case basis, elects in writing to waive termination. Any vested, exercisable options that the Optionee holds will be cashed out, converted to an option of the acquiring entity, assumed by the acquiring entity or otherwise disposed of in the manner provided for in any shareholder-approved agreement or plan governing or providing for such Corporate Transaction or, in the absence of such governing provisions, as decided by the Committee consistent with the terms of the Plan.

(b) If this option is assumed in connection with a Corporate Transaction, then this option shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to Optionee in consummation of such Corporate Transaction had the option been exercised immediately prior to such Corporate Transaction, and appropriate adjustments shall also be made to the Exercise Price, provided the aggregate Exercise Price shall remain the same.

(c) This Agreement shall not in any way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure assets. ...

G. Corporate Transaction shall mean any of the following occurrences:

(i) any "person," as such term is used in Sections 13(d) and 14(d) of the 1934 Act (other than the Corporation, any trustee or other fiduciary holding securities under an employee benefit plan of the Corporation or any corporation owned, directly or indirectly, by the stockholders of the Corporation in substantially the same proportions as their ownership of stock of the Corporation), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of securities of the Corporation representing 50% or more of the combined voting power of the Corporation's then outstanding securities;

(ii) during any period of not more than two consecutive years (not including any period prior to the adoption of the Plan), individuals who at the beginning of such period constitute the Board of Directors and any new director (other than a director designated by a person who has entered into an agreement with the Corporation to effect a transaction described in clause (i), (iii) or (iv) of this section whose election by the Board of Directors or nomination for election was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority thereof;

(iii) the stockholders of the Corporation approve a merger or consolidation of the Corporation with any other corporation, other than (A) a merger or consolidation that would result in the voting securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Corporation or such surviving entity outstanding immediately after such merger or consolidation or (B) a merger or consolidation effected to implement a recapitalization of the Corporation (or similar transaction) in which no "person" (as herein above defined) acquires more than 50% of the combined voting power of the Corporation's then outstanding securities; or

(iv) the stockholders of the Corporation approve a plan of complete liquidation of the Corporation or an agreement for the sale or disposition by the Corporation of all or substantially all of the Corporation's assets.

The stock was at $3.76 on the 23rd, on what I thought looked like a down trend but today it closed at $3.95, up 2.07% -- so if Darl exercised his options tomorrow, he's already made some money. (Note Update above. The date has been amended to 2007.) Hey, you have to reward your management team or you lose them. SCO depends on Darl. That's what I keep reading in SCO's 10Q SEC filings:

We need to retain our management, technical, and support personnel. Competition for qualified professionals in the software industry is intense, and departures of existing personnel could be disruptive to our business and might result in the departure of other employees. The loss or departure of any officers or key employees could harm our ability to implement our business plan and could adversely affect our operations. Our future success depends to a significant extent on the continued service and coordination of our management team, particularly Darl C. McBride, our President and Chief Executive Officer.

I think we can all agree that this management team truly is one of a kind.


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