SiliconBeat

Intel chief executive Paul Otellini’s part-time job paid off handsomely again last month.

In his spare time away from running the world’s largest semiconductor manufacturer, Otellini serves on the board of directors for Google, a company whose market value has overtaken Intel’s since his time on its board.

Google’s board members don’t receive any cash compensation for their service. Instead they are paid in something that, so far, has proved far more valuable than U.S. dollars (which isn’t so hard these days). They are paid in Google stock.

When Otellini first joined Google’s board in April 2004, months before its initial public offering, he was granted an option to buy 65,000 shares of its stock at $35 a share, or $2.28 million. Google shares were first offered to the public through an auction process that priced them at $85 before they first began trading in August 2004.

Otellini sold 23,833 shares of Google from Nov. 16 to Nov. 20 at an average per-share price of $638.15, giving him a profit of more than $600 per share. He sold 21,666 shares in 2006 at an average price of about $400 per share. His total profit on his Google options so far: $22.3 million.

In his first year on the board, Otellini served on its audit committee. For the last two years has served on its leadership development and compensation committee.

From 2004 through 2006, Google’s board has met 27 times, including 14 meetings in 2004, some of which were no doubt held prior to Otellini’s becoming a member. Meetings of the committees on which he has served number 12 during that time. The board and committees also acted 9 times via written consent rather than in person, making for a maximum of 48 board-related events for Otellini since 2004.

That works out to compensation of about $464,000 per Google board event. Nice work, if you can get it.

Compare that with his full-time employment at Intel, where he also receives salary and bonus. Over the the last 16 years he has netted some $102 million exercising and selling about 5.2 million Intel shares of Intel, according to Thomson Financial.

Despite a headline on its earnings release that included the phrase “Company Achieves Annual Run Rate of $3 Billion, ” shares of Marvell Technology tumbled in after-hours trading Tuesday.

Marvell shareholders were not the only ones to feel some pain in the wake of the earnings release. A profit-margin squeeze at the Bermuda-based chip maker that operates out of Santa Clara drove it to announce the layoff of about 400 employees, or about 7 percent of its workforce.

The company said that the “workforce reduction will affect all functions of the Company’s global workforce, and in particular positions based in the United States and Israel, and to a lesser degree, other international locations.” The plan, which is estimated to cost $8 million, is expected to be completed in the fourth quarter of fiscal 2008.

The company posted record quarterly sales of $758 million for its fiscal 2008 third quarter ended Oct. 27. That was more than the consensus estimate of $710 million made by about two dozen analysts surveyed by Bloomberg, and 46 percent higher than sales in the year-before quarter.

However, the company’s gross profit margin fell to 47.7 percent, compared with 50.2 percent the year before. The company reported a net loss of $6.4 million, compared with a $6 million profit the year before.

The company’s balance sheet has taken a bit of a beating so far this year. Cash and short-term investments are down 11 percent so far in fiscal 2008, while inventories have mushroomed more then 50 percent and accounts receivables are up more than 17 percent.

Maxygen, the Redwood City bio-pharmaceutical company, will consolidate its operations by closing its Danish subsidiary and relocating its research-and-development activities to its Silicon Valley location. The move is expected to boost its local headcount by about 25
employees.

Russell Howard, Maxygen’s chief executive, cited the “weakening dollar” for
“significantly” increasing the cost of operating its Denmark facility, in a press release included with the company’s 8-K filing announcing the move.

This year has not been kind to Maxygen shares which have lost about a third of their value so far in 2007. They touched a 52-week low of $6.12 on Nov. 2.

On Monday, the company announced in a filing with the SEC that end of its collaboration
agreement with Roche, the Swiss pharmaceutical giant, in their efforts to jointly develop and commercialize MAXY-alpha, Maxygen’s treatment of Hepatitis C virus and Hepatitis B virus. Roche had initiated a Phase Ia trial of the treatment in November 2006, but put a voluntarily hold on further clinical development in September. Based on an evaluation of the data collected by Roche, the two companies agreed to discontinue the clinical development of the drug.

All rights to the MAXY-alpha product revert back to Maxygen, which is currently “evaluating” its plans for the continued development of the drug.

In a November 19 filing, Maxygen said it would see about $7 million in revenue in the fourth quarter of 2007 under its license agreement with Codexis, a company Maxygen spun-out in 2003 that uses Maxygen chemical-research technology to develop applications related to energy development.

Maxygen’s ownership interest in Codexis was reduced to approximately 25 percent following an equity investment in Codexis by Royal Dutch Shell. Shell will expand its collaboration agreement with Codexis for the development of new super enzymes to convert biomass to fuel.

Stuart Nichols, the man who wouldn’t act as “war-time counselor” to KLA-Tencor’s then chief executive Ken Schroeder in his battle to win battles for talent during the bubble years using questionable stock option practices, surfaced Monday as the new chief lawyer for MIPS Technologies.

Nichols resigned as general counsel at KLA-Tencor last year the same day that the company “terminated” its employment agreement with its former CEO in the wake of an investigation that uncovered misdated stock options. It was also the same day that the company’s founder and chairman, Ken Levy, chose to “retire”.

Nichols authored a “Stock Options Pricing” memo sent to Schroeder in March 2001 warning him that selecting grant prices with hindsight required the company to take a compensation charge, and that doing so without disclosing the fact could run afoul of the law, according to a civil action filed by the SEC against Schroeder in July.

In an e-mail reply, Schroeder asked Nichols to “Help me, don’t just tell me how to follow a strict interpretation of rules. I need a “”war-time counselor,” not someone who can recite page and verse.” Schroeder’s behavior continued as late as 2005, despite legal advice from Nichols that doing so was against the rules, the SEC alleges.

In August, the SEC accused KLA’s former general counsel prior to Nichols, with intentionally misdating ”dozens” of grants between 1997 and 2003 and of providing KLA a guide on how to backdate options when she left the company in 1999 to join Juniper Networks.

Nichols’ new employer had its own brush with option-backdating practices and took a charge of $46 million to account for mispriced options granted from 1999 through 2003 when it finally filed its 10-K for fiscal year 2006.

Nichols, who will be paid $250,000 a year and be eligible to receive a bonus of between
$100,000 and $200,000 a year, will also be given an option for 250,000 shares of MIPS, according to his offer letter. The timing of their grant date is meticulously spelled out in his Nov. 14 offer letter from the company’s chief executive: “Currently, new hire options are granted on the last Thursday of each month and are priced using the market closing price on that date.”

That would be Thursday, Nov. 29, a date that will nevertheless be rather well-timed: MIPS shares touched a 52-week low Monday of $5.69.

Recruiting a new chief executive is probably never easy, or fun, when your stock is trading at 17 cents. You’ve got to go out and find a real glass-half-full kind of person. The kind of person who looks at 17 cents and sees only the upside.

Presumably, that’s what Intraop Medical (ticker: IOPM.OB) of Sunnyvale thinks it got when it hired John Powers last week. But in an 8-K filed on Monday, the medical device company disclosed the terms of his hiring, which demonstrates what a 17-cent company has to do to entice a candidate.

For example, Powers gets:

• An annual salary of $185,000, plus a potential bonus up to that amount. Chump change by valley standards.
• He gets to work from home in Orange County. If he wants an office in Orange County, the company will set one up and pay for it. Plus, they’ll pay travel expenses for his commute.
• He gets 18.3 million options, which is 5 percent of the company. With the stock at 17 cents, that should buy him a couple of tickets to Disneyland. (Actually, current value is about $3 million.) These options vest over four years.
• A signing bonus of $64,000.

Also worth noting: Those options fully vest if the company is sold in the next 18 months. Sounds like a good incentive for Powers to get the company listed on eBay, and fast.

When last we wrote of Stratton Sclavos, former CEO of VeriSign (ticker:VRSN) and international man of mystery, he was leaving his former company under less than ideal circumstances (options backdating probe, blah, blah, blah). No charges or accusations of wrongdoing, but still…

Then in July, we learned he got a $25 million severance package. And since then, it’s been all quiet on the Sclavos front.

Today, we got a little reminder that he’s still alive and kicking and serving on the board of Salesforce.com (ticker:CRM). In a series of Form 4s filed on Wednesday, Stratton reported that he sold 90,780 shares of his Salesforce.com stock on Nov. 20 to collect about $5.1 million.

Stratton picked a good day to sell. Salesforce’s stock jumped from $54.51 to $57.40 as he sold his stock through out the day. We’re not sure what gave the stock its boost.

Say this for Stratton: For a guy who doesn’t have a full-time, he’s still managing to make a heck of a lot more money than most of us.  

Today’s nose dive in Calpine’s stock price was a disaster for shareholders who began and ended the day owning its shares. But for shareholders yet to be? Manna from heaven.

Recall way back to yesterday when news surfaced of proposed equity “emergence” awards contained in a supplement to Calpine’s September reorganization plan that was filed Friday. (Puh-lease don’t call them bonuses — Calpine spokesman Mel Scott doesn’t like that, says Mercury News reporter Scott Duke Harris in his story about them today.)

Calpine’s chief executive, Robert May, is to be given $10.9 million worth of the Calpine’s post-bankruptcy shares. Calpine’s chief lawyer, Gregory Doody, will get $2 million worth of such shares. Executive and senior vice presidents are to get awards worth 300 percent of their “executive competitive Annual Award” (can we call those bonuses?) while managers, vice presidents and director-level employees get 200 percent of “manager’s competitive Annual Awards.”

The company will also give awards to yet-to-be-named executives in charge of operations, finance and administration. (Exactly who is running the shop these days?)

The “emergence awards” will be paid 25 percent in stock options, whose value depends on the stock price rising over time, and 75 percent in restricted stock grants that retain value even if the share price drops. (Unless, of course, it drops to zero.)

And the rank and file? They will each get a stock option award valued at $7,500 on the grant date. They would receive no restricted stock.

But the number of shares behind these stock awards are not spelled out. And there’s the rub.

Late Monday evening Calpine released the news that its financial adviser lowered its estimated value by, oh, some $900 million. Calpine shares lost more than 46 percent of their value after the news. Based on its current price, the number of shares in these so-called emergence awards would have doubled today.

The final terms of the awards, including the number of shares and their price, will be established once the company emerges from bankruptcy by its reorganized board of directors “no later than 90 days after the Effective Date.”

Calpine shares will no doubt be worth more once its debts are discharged after the company emerges from bankruptcy, but Calpine executives can’t help but hope that the lower the grant price for their future awards, the more shares they will get as a result.

Call us obsessed. But just what is Oracle (ticker:ORCL) CEO Larry Ellison doing dumping all this stock?

On Monday, Ellison filed a Form 4indicating that he sold another 1 million shares at $20.636 per share to collect $20.636 million. (It took all of our computing power at Docu-drama headquarters to calculate that number). He still has 1.17 BILLION shares.

We can’t remember the last day Big Larry didn’t sell a million shares. Seriously. Stretching back to late September, he’s sold between 3 and 6 million shares every week. That puts his total sales for the last 2 months at $707.836 million.

If you’re looking for a new office pool, you can try to guess which day in December that Ellison will pass the $1 billion threshold this year. Don’t forget that he sold another $61 million back in January.

Since ShoreTel (ticker:SHOR), the Sunnyvale telecom company, went public last summer, its stock has had a nice little run. Not Google-like, mind you. But it’s up from the first day close of $12.15 back in July, to $14.23 on Monday.  Along the way, it got as high as $15.49.

That’s been pretty good news for one of its largest shareholders, Lehman Brothers Venture Partners. Lehman holds about 7.6 million shares, or 17.8 percent of the stock.

On Monday, ShoreTel filed a proxy indicating that Lehman intends to sell 4.4 million shares in the coming weeks. That would be worth about $62.612 million as of Monday. 

But here’s the sweet part: Lehman also collected fees for underwriting ShoreTel’s IPO back in July. And it will collect some more fees for underwriting what is known as a secondary offer.

Here’s the real kicker, though: ShoreTel will get to pay Lehman for selling its own stock, in a deal that will raise no money  for ShoreTel. Neat, huh?

This was shaping up be a real nice holiday around the Transmeta (ticker: TMTA) offices. The chip company just got a nice little chunk of cash from rival Intel for a liscensing agreement. That $150 million payment would keep any of us warm on these increasingly chilly nights.

Oh, but then they had to go and open the mail.

What’s this? A letter from Riley Investment Management of Los Angeles, filed on Monday. Says here they own 5.9 percent of our stock. Hmm, neat. Wonder what they want?

Let’s see, blah, blah, blah, boilerplate, boilerplate, “negative enterprise value,” blah, blah, blah, $150 million from Intel, and, uh-oh:

“RIM urges the Issuer to carefully review all options to enhance shareholder value.”

Gulp. Wonder that that means?

“Among these would be potentially selling the intellectual property to a company who can better leverage the costs associated with pursuing this strategy, delisting from NASDAQ and/or going “dark” to significantly reduce public company costs, and/or engaging in a significant dutch tender. Given RIM’s view that an investment in the Issuer is akin to a risk-free call on the intellectual property, RIM would discourage and view unfavorably any acquisitions.”

Delisting? Dark? Dutch tender? Ye gods. We don’t know what that last one means, but we still winced when we read it.

Looks like this won’t be the relaxing holiday weekend Transmeta had planned.