Texb:Are You Sure That is This Plan Only?
texb wrote:
"This interpretation of 'outstanding shares' is supported by noting that if the limitation applied as you suggest to 5% of shares 'available' under the plan, then that covenant has already been violated. (5% of 3.5 million shares would be an annual limit of 175,000 shares. Through 12/31/02, the plan was in existence for four years, so a total of 700,000 would have been permitted to be awarded. Actual grants through 12/31/02, however, were 921,064 shares [3,500,000 less 2,578,936 per the last 10-K]."
Are you sure that figure is the grants from this plan only? In the proxy those shares are lumped together with certain other shares, per FN 4, pa 18. Is it broken out specifically in the last 10K you are referring to?
Also: do you have a link to the original plan pre april 2000 amendments? Maybe the restriction was added in the later amendment or changed in the later amendment?
Otherwise one of us intrepid researchers should call IR and ask for an explantion IMHO on Tuesday.
This is bugging me.
I found one more thing that makes me disagree with your analysis and suggested interpretation that the reference is to ALL outstanding shares:
Paragraph 4 contains a reference to paragraph 9:
"4. SHARES SUBJECT TO THE PLAN
Not more than 3,500,000 Shares in the aggregate may be issued under the Plan pursuant to the grant of Awards, subject to adjustment in accordance with Paragraph 9; provided, however, that during any calendar year not more than five percent (5%) of the outstanding Shares may be subject to Awards under the Plan. The Shares issued under the Plan may, at the Company's option, be either Shares held in treasury or Shares originally issued for such purpose. If Restricted Stock or Restricted Stock Units are forfeited pursuant to the terms of an Award,
other Awards with respect to such Shares may be granted."
And paragraph 9 has a specific definition of what is meant by 'shares':
"9. CHANGES IN CAPITALIZATION
In the event that Shares are changed into or exchanged for a different number or kind of shares of stock or other securities of the Company, whether through merger, consolidation, reorganization, recapitalization, stock dividend, stock split-up or other substitution of securities of the Company, the Board shall make appropriate equitable anti-dilution adjustments to the number and class of shares of stock available for issuance under the Plan, and subject to
outstanding Awards. Any reference to the term "Shares" in the Plan and option agreements shall be a reference to the appropriate number and class of shares of stock available for issuance under the Plan, as adjusted pursuant to this Paragraph 9. The Board's adjustment shall be effective and binding for all purposes of this Plan. The adjustment provided for in this Paragraph 9 may require the Company to issue fractional shares, and the total adjustment with respect to the Plan shall be determined accordingly."
Thus the term 'shares' refers to the 3.5 M shares available for issuance UNDER THIS PLAN, not all outstanding shares of common stock as you suggest.
Sure, it doesn't make sense AND if your figures are right and the same restriction applied since 1999 then EITHER there has been a violation of that restriction OR, as I suggested before, the date of adoption of the plan IF in early 1999, could mean that we entered year FIVE sometime during the first months of 2003 and shares were issued in year five that in total do NOT violate the covenant (although that isn't true--that would only get us to 875,000 shares--and it is actually less than that since each 5% award is incrementally smaller than the one before it due to the reduction from 3.5 M shares due to previous grants, so it is closer to but a little less than 850,000 without actually doing the math).
Another possibility is that there was a higher % permitted in year 1 prior to the april 2000 amendment.
I could still be interpreting this entirely incorrectly, but someone has to point out how and why and offer a better interpretation and explain where it comes from.
But I think that we will eventually get to the bottom of this.
AI
