Believe it or not, SCO has filed an 8K disclosing some stock option grants and potential bonuses for its employees. Here's the wording from the 8K on the stock options:
Stock Option Grants. The Board approved stock options to purchase shares of the Company’s common stock pursuant to the 2002 Omnibus Equity Incentive Plan to the executive officers named below. Each of the stock options, as provided in the Executive Officer Stock Option Agreements, dated as of November 13, 2006, between each executive officer and the Company, has an exercise price equal to the fair market value on the date of the grant, and will expire ten years from the date of grant. The first 25 percent of the option shares vest upon the first anniversary of the date of grant and the remaining option shares vest over the following three years on a monthly basis so long as the executive officers remain in service with the Company. However, option vesting will accelerate upon a change in control of the Company and upon the declaration by the Board of the payment of a dividend to the common stockholders of the Company.
Darl has 100,000 shares listed by his name, at $2.30. SCO closed Friday at $2.45. So, would that mean that if there could be a sudden change of control or a decision to pay dividends to common stockholders, he'd already have a little pocket change? His potential bonus is $278,250, if he meets all targets set for him. And can you think of anyone more deserving?
The details are a bit foggy about the bonuses, and everyone is sworn to the deepest secrecy:
Participation in the Bonus Plan and all related discussion and documentation is considered fully confidential between the Company and the employee. All employees are expected to honor this confidentiality and not disclose or discuss Bonus Plan matters with any persons other than his/her manager or Human Resources. Failure to maintain confidentiality regarding the Bonus Plan may jeopardize participation and/or award eligibility.
However, not to worry. There's an ethics clause:
Any participant who manipulates or attempts to manipulate the Bonus Plan for personal gain at the expense of customers, other employees, or Company objectives will be subject to appropriate disciplinary action, up to and including termination of employment.
Well, thank heaven; that's a relief. One wouldn't want manipulation at the expense of customers, that's for sure. There's a sales plan too, and you'll be happy to know that the executives and the members of the Board of Directors can benefit from that:
Strategic Initiatives: Strategic initiatives initiated by the Company’s executive team or Board of Directors may be eligible for quota relief and commission payments. Decisions on quota relief and commission payments will be determined by the CFO.
All very inhouse.
Novell had better hurry if it wants its money, methinks.
There is also another SEC filing filed in the middle of October. It is a May 25, 2006 letter from the SEC to SCO, asking for clarification of a May 8, 2006 S3 filing which in turn amended a June 22, 2004 S3. I don't think it's news in any sense, so I don't know why we are only seeing this letter in October.
To review what it was about, this S3 was self-described like this:
This prospectus relates to the sale, transfer or distribution of up to 2,105,263 shares of the common stock, par value $0.001 per share, of The SCO Group, Inc. by the selling stockholders described herein.
It bore the usual notice that the
the prospective selling stockholders couldn't sell these securities "until the registration statement filed with the Securities and Exchange Commission is effective." The question the SEC specifically had about the filing was:
Please confirm, if true, that neither of the two selling stockholders are broker-dealers or affiliates of registered broker-dealers.
The two selling stockholders on that S3 are BayStar and SDS Capital Group SPC, Ltd. Who is SDS Capital Group? They're located in Old Greenwich, CT and as we told you in June, Stephen Derby is the sole managing member of SDS Management, LLC, the investment manager of SDS Capital Group SPC, Ltd. He was at one time a managing member of BayStar. Here's the Insider Trading page for the SCO Group and the page of major shareholders. I don't see them on either list.
Why did a May letter only show up in October, when the issue has apparently long been resolved? I have no idea. The SCO Group's attorney already answered the letter, confirming that neither was a broker-dealer or an affiliate of a registered broker-dealer. And we've already seen they filed the Notice of Effectiveness. I gather this is to complete the record, and in that context, I do the same. Also, I am not in any way an expert on SEC filings, so I just let you know about them all.
May 25, 2006
Mail Stop 4561
Darl C. McBride
President and Chief Executive Officer
The SCO Group, Inc.
Re: The SCO Group, Inc.
Post-effective Amendment to a Registration Statement on
Filed May 8, 2006
File No. 333-116732
Dear Mr. McBride:
We have limited our review of your filing to those issues we
have addressed in our comments. Where indicated, we think you
revise your document in response to these comments. If you
we will consider your explanation as to why our comment is
inapplicable or a revision is unnecessary. Please be as detailed
necessary in your explanation. In some of our comments, we may
you to provide us with information so we may better understand
disclosure. After reviewing this information, we may raise
Please understand that the purpose of our review process is
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
our review. Feel free to call us at the telephone numbers listed
the end of this letter.
Selling Stockholders, page 8
1. Please confirm, if true, that neither of the two selling
stockholders are broker-dealers or affiliates of registered
Item 12. Undertakings, page II-2
2. Item 512(a) of Regulation S-K was recently amended in Release
33-8591. Please revise your undertakings as appropriate.
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested information. Detailed cover
letters greatly facilitate our review. Please understand that we
have additional comments after reviewing your amendment and
to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities Act
1933 and that they have provided all information investors require
for an informed investment decision. Since the company and its
management are in possession of all facts relating to a company`s
disclosure, they are responsible for the accuracy and adequacy of
disclosures they have made.
Notwithstanding our comments, SCO Group, Inc. should furnish
letters prior to effectiveness of the post-effective amendment
* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
accuracy of the disclosure in the filing; and
* the company may not assert staff comments and the declaration of
effectiveness as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the
In addition, please be advised that the Division of
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
filing or in response to our comments on your filing.
Please contact [name] at [telephone number] or me at [telephone number] with any other questions.
Barbara C. Jacobs
CC: Nolan S. Taylor
Dorsey & Whitney LLP
[address, phone, fax]
Darl C. McBride, President
The SCO Group, Inc.
May 25, 2006
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