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Marvell Technology has offered to exchange options held by its employees with an exercise price of $12 or higher for a pro-rated number of shares of restricted stock. The exchange period, which began Tuesday, ends Jan. 23.
The exchange rate for options priced from $12 to $18 will be one restricted stock unit for every 6.55 exchanged options; from $18.01 to $25, one restricted stock unit for every 8.4 exchanged options; and for options priced above $25, one restricted stock unit for every 13.2 exchanged options.
The company said it is making the offer “to restore the retention and incentive benefits of our equity awards” since many of the current options held by them “have exercise prices that are significantly higher than the current market price for our stock… commonly referred to as being ‘underwater.’ By making this offer, we intend to provide eligible employees with the opportunity to receive restricted stock units that have a greater retention value because such restricted stock units are more likely to provide a return than the underwater options.”
And no, the company’s named officers and the directors serving on its board may not participate.
Last May, Marvell reached an agreement with the SEC over its investigation into its “historic stock option granting practices” — a euphemism for stock option price picking — that included the payment of a $10 million civil penalty.
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