Every month, Compliance Week publishes a list of the largest stock option grants and restricted stock awards during the previous period. The data and analysis are provided by compensation research firm Equilar.
In December, the top equity award went to Martine Rothblatt, CEO of United Therapeutics. He received 540,861 options on Dec. 31 with an exercise price of $63.22, implying a face value of more than $34 million.
The trend that emerged in December was toward hybrid packages. Google and Devon Energy awarded executives with equity pay packages that mixed options and restricted stock.
At Google, Nikesh Arora, president of global sales and business development, and Patrick Pichette, CFO, each received nearly 40,000 options with an implied face value of $22.6 million. Google also granted Arora and Pichette restricted stock packages of 19,995 shares with a price of $564.35, each with a face value of $11,284,178.
Devon Energy gave Larry Nichols, executive chairman, and CEO John Richels options with an implied face value of nearly $14 million. It also granted them restricted stock On December 2, Nichols received 74,900 shares at $73.43 with a value of $5.5 million, and Richels got 68,100 shares at the same price, worth $5 million.
The largest restricted stock package went to Steven Laub, CEO of chipmaker Atmel. On December 30, he was granted 1 million shares worth $12.3 million, based on a grant-date share price of $12.27. Google also gave Shona Brown, senior vice president of business operations, and Robert Alan Eustace, senior vice president of engineering and research each 9,998 shares of restricted stock at a price of $564.35 and a face value of $5,642,371.
Premium-Pricing
Two companies granted premium-priced options in December. M.D.C. Holdings granted options to two executives with an exercise price 10 percent higher than the company's closing stock price on the grant date of $28.86. American Vanguard granted options to five executives with an exercise price 7.4 percent higher than the closing price of $6.98 on the grant date.
Equilar noted that companies continue to issue performance-based options and equity awards. In December, a number of companies used share price appreciation as the hurdle. For example, MSCI Inc. granted stock option to one executive that carried the following performance-related footnote:
“Includes 54,935 options, 52,631 options, 50,835 options, and 49,774 options subject to time-vesting and price-vesting. The option tranches time-vest on the second, third, fourth and fifth anniversaries of the grant date, respectively. Each option tranche will price-vest if the closing price of MSCI class A common stock satisfies stock price targets of $41.70, $46.70, $51.70, and $56.70, respectively, for 20 consecutive trading days following the applicable time-vesting date and prior to the expiration date.”
UDR Inc. granted restricted stock to two executives with the condition of performance targets over the next two years that would add a year to the vesting period if they weren't met. The footnote read:
“Vesting of the shares awarded to the reporting person is subject to the reporting person's continued employment with the Issuer and the achievement by the Issuer of certain performance goals during the period ending December 31, 2012; provided, that if the performance goals are not met during such period, vesting will be extended for an additional year and certain of the performance targets will be increased.”
A downloadable spreadsheet of the top 10 equity awards in December can be found in the box above, right. Also available are data from 2004-2010.