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.

THE DATA

Note

Please note that all values are rough "face value" numbers, which are calculated by data provider Equilar, Inc., by multiplying the number of shares in the grant by the market price per share on the grant date.

Latest Data

The spreadsheet below also includes the "Top 10" lists for each month year-to-date.

View The Top Equity Awards Made In May 2006

Prior Years' Data

Last Year: View Equity Awards From Each Month In 2005

Prior Data: View Equity Awards From Each Month In 2004

Source: Equilar Inc.

Semel

The largest stock option grant in May went to Terry Semel, chairman and chief executive officer of Internet portal Yahoo. On May 31, Semel was granted 6 million options with a face value of more than $189 million, based on the grant date stock price of $31.59. Three other Yahoo executives also ranked in the top five for May grants: Chief Financial Officer Susan Decker and Chief Operating Officer Daniel Rosenweig each received a grant of 2.1 million options, worth $66.3 million; Chief Technology Officer Farzad Nazem received a grant of 900,000 options with a face value of $28.4 million. The grants came six weeks after Yahoo announced quarterly results that saw revenue up 34 percent, although net income fell 22 percent.

Hammergren

The largest stock award in May 2006 went to John Hammergren, president and chief executive officer of McKesson Corp. On May 23, Hammergren received 266,000 shares (as restricted stock units) with a face value of nearly $12.8 million, based on the grant date stock price of $47.97. Ranked second was Van Honeycutt, chief executive officer of IT services giant Computer Sciences Corp.; he received 174,256 shares on May 22 worth $55.35 each, for a total face value of $9.64 million.

A downloadable spreadsheet of the "top 10" option grants and stock awards from May 2006 can be found in the box at right.

According to Equilar, the grants and awards made in May continue a number of trends identified in prior months. Among the trends: companies continue to shorten option term lengths, and to issue performance-based options and stock. Examples of each trend can be found below:

Shortened Option Term Length

The following companies granted options with a term of 10 years in the previous fiscal year, but in May granted options with a shortened term length:

On May 5, Littlefuse granted options to nine executives with a term of seven years.

On May 19, Schering-Plough Corp. granted options to nine executives with a term of seven years.

Premium-Priced Options

On May 8, IBM granted options to 16 executives with exercise prices 9.8 percent higher than the company’s closing stock price of $82.89 on that date.

On May 8, Advo granted options to an executive vice president with an exercise price 13.8 percent higher than the company’s closing stock price of $28.53 on that date.

Performance-Based Options

On May 16, ChoicePoint granted performance-contingent stock options to nine executives with the following vesting criteria:

“Nonqualified stock option granted under the ChoicePoint 2003 omnibus incentive plan. Vesting based on predetermined increases in operating income or Company stock price for a three-year period.”

On May 19, Schering-Plough granted options to eight executives, where part of each grant is performance contingent. The vesting criteria for the chairman and chief executive is as follows:

“Granted under Schering-Plough Corporation 2006 stock incentive plan and exercisable in one-third increments on April 1 of 2007, 2008 and 2009. The vesting of 200,000 option shares is subject to Schering-Plough’s satisfaction of certain performance criteria for the year 2006.”

On May 8, HealthMarkets granted options to five executives. The exercise price of the options will increase over time, making their value dependent on increases in the company’s stock price as follows:

“The initial exercise price of the option is $37. The exercise price of the option will accrete by 10 percent per year, starting on May 8, 2008. If the optionee exercises the option prior to May 8, 2008, the exercise price will be $37. If the optionee exercises the option on or after May 8, 2008 but prior to May 8, 2009, the exercise price will be $40.70. If the optionee exercises the option on or after May 8, 2009 but prior to May 8, 2010, the exercise price will be $44.77. If the optionee exercises the option on or after May 8, 2010 but prior to May 8, 2011, the exercise price will be $49.25. If the optionee exercises the option on or after May 8, 2011, the exercise price will be $54.17.”

Performance-Based Restricted Stock/Restricted Stock Units

On May 9, Midas granted performance-accelerated restricted shares to six executives with the following vesting criteria:

“These shares vest on the seventh anniversary of the date of grant. However, an amount equal to 33 1/3 percent of all of the shares granted shall immediately vest on each anniversary of the date of grant if, on such anniversary date, the total shareholder return on the company’s common stock during the immediately preceding 12 month period exceeds the total shareholder return of the Standard and Poor’s 500 Stock Index for the same period.”

On May 25, URS Corp. granted restricted shares to seven executives, where half of each grant had performance-contingent vesting as follows:

“Awarded pursuant to the issuer’s 1999 equity incentive plan. This award provides for time-based vesting ratably over four years on May 25, 2007, May 25, 2008, May 25, 2009, and May 25, 2010, respectively. In addition, 50 percent of the shares in this award is subject to performance-based vesting tied to the satisfaction by the company of the board’s approved net income target each year.”

On May 16, XTO Energy granted performance shares to its senior vice president and controller with the following vesting criteria:

“Grant of performance shares under the amended and restated 2004 stock incentive plan that will vest 50 percent when the common stock closes at or above $55 and 50 percent when the common stock closes at or above $60 on the New York Stock Exchange.”

A downloadable spreadsheet of the "top 10" equity awards in May 2006 can be found in the box above right. The spreadsheet includes data from the first three months of the year, as well. Also available are data from 2004 and 2005.

For related coverage, please select "Executive Compensation" or "Stock Option Expensing" in the left-hand column of any page on the Compliance Week Web site.